Chevron and Its Claim of Energy Efficiency

First, two caveats.

1. Just about every oil company in the world, including Chevron, is under attack for one reason or another. Sometimes the attacks have legitimate reasons behind them and sometimes the attacks are rhetorical overkill. My post is more in the category of simple reality check.

2. Chevron doesn't have the aggressive anti-environmental record of Exxon and it doesn't have the aggressively hypocritical reputation of British Petroleum (BP) which for some years touted its environmental record while not being so green behind the scenes. Chevron isn't as bad as some oil companies but it's still an oil company. And oil companies need good public relations these days no matter who they are.

I noticed an ad the other day in Technology Review, February 2010. The ad is on page 2 and part of it reads:

At Chevron, we've focused on energy efficiency for decades. Since 1992, we've improved the energy efficiency of our own global operations by 28%. And with Chevron Energy Solutions we help other businesses and governments do the same—from Colorado where we're upgrading municipal buildings to reduce energy costs by 24% to 30%—to Pennsylvania where we're helping schools reduce their energy bills by more than a million dollars a year.

I don't argue the basic honesty of what's being said except to say that it's incomplete and therefore misleading. Energy efficiency is real as well as important if you're installing LEDs or weather-proofing buildings. But such things are not the only energy efficiency games in town.

The truth is that it's getting harder and harder to drill for oil. It takes more money, people, equipment and, yes, energy to create energy. That's efficiency going in the wrong direction.

Also, as oil companies find less and less light sweet crude, they have to turn to heavy oil which is clearly less efficient to refine. To turn heavy oil into gasoline requires high heat and high pressure, both of which take more energy.

Finally, most of what an oil company produces is used to provide fossil fuels for transportation. But cars based on diesel and gasoline are not as efficient as cars that use—or mostly use—electricity from power companies. Fueling a battery by plugging into the power grid is far more efficient than fueling a car with gasoline.

Even when power grids get their energy from plants that burn fossil fuels, electric cars are still more efficient. In the long run, however, power plants are going to have to switch to sustainable forms of energy such as solar and wind.

The Chevron ad begin with the sentence: "Every dollar invested in energy efficiency today could return two dollars in energy savings." Again, energy efficiency of the kind Chevron is promoting happens to be important. But eighty years ago a dollar's worth of energy invested in an oil field produced a hundred dollars worth of energy.

Today, in Texas, some oil wells now use more energy than they produce. Why? Because arcane laws, subsidies and tax rules make it profitable. On the other hand, there are wind turbines that return 30-60 dollars of energy for every dollar of energy invested. Something needs to change.

Although there are plenty of oil wells in the world that return excellent net energy, the reality is that worldwide the net energy per barrel of oil drops yearly as more energy is required to produce that barrel. Oil is refined into many different products and we as consumers can't easily see how energy is used to make energy but let me offer a rough metaphor of sorts: for every 100 gallons of gasoline we put in our cars, we used to give the oil companies a gallon back to go out and find more oil, pump it, refine it and transport it to our gas tank. Now for every 100 gallons we put in our cars, we have to give back anywhere from 3 to 10 gallons depending on who's providing our oil (if you get your gas exclusively from those handful of inefficient Texas wells, you might as well get a horse!).

Oil companies are going to be in business for many years to come simply because it's going to take at least twenty years to build a truly efficient energy infrastructure that is sustainable and sensible, but the oil companies, Chevron included, are going to have to change.

Good News and Sobering News on Wind Energy

The good news over the last three or four years is that wind generation is being taken seriously in the United States. A number of European countries are way ahead of us in terms of total percentage of electricity produced by wind. And it will still be true for some time to come that Europe as a whole still generates more power from wind than we do. But Americans are finally making progress. Here's the story by AWEA: the American Wind Energy Association:

The American Wind Energy Association (AWEA) reported today in its third quarter (Q3) market report that the U.S. wind energy industry installed 1,649 megawatts (MW) of new power generating capacity in the third quarter—an amount higher than either the 2nd quarter of 2009 or the 3rd quarter of 2008—bringing the total capacity added this year to date to over 5,800 MW. AWEA also reported that wind turbine manufacturing still lags below 2008 levels, in both production and new announcements.

(snip)

The total wind power capacity now operating in the U.S. is over 31,000 MW, generating enough electricity to power the equivalent of nearly 9 million homes, avoiding the emissions of 57 million tons of carbon annually and reducing expected carbon emissions from the electricity sector by 2.5%.

Like I said, this is good news. But we need to put it into perspective. For one thing, 31,000 MW is only a small percentage of our total generating capacity. In addition, as Americans over the next ten years turn more and more to hybrids, electric cars and plug-ins, we will need more electricity produced by wind and solar.

According to the EIA (part of the Department of Energy), the United States in 2007 had a maximum generating capacity from all sources of 994,888 MW. That's a lot of electricity. Unfortunately, some 75% of our electricity still comes from fossil fuels. We have a long ways to go to retire fossil fuels just for producing electricity.

We also will have to create a larger capacity to electrify our transportation. Luckily, cars need less energy in the form of electrical power than they do from gasoline and diesel, largely because so much of the energy from fossils fuels is lost in the form of heat.

Let's hope we can double the production of wind turbines in the next two or three years.

It's Alternative Energy, Not Alternative Fuels (sigh)

If it burns, it's a fuel. If it's ethanol, it's not new.

So I had a problem when BusinessWeek had this headline a few days ago: ENERGY SECRETARY TELLS CEOS NEW FUELS COMING.

Well, I'm not sure that's precisely what Interior Secretary Ken Salazar or Energy Secretary Steven Chu said at a meeting in North Carolina. I hope not. Actually, BusinessWeek isn't totally at fault. They simply ran an AP story whose headline seems to have been used elsewhere as well. But a periodical is responsible for its stories. If someone has truly discovered a 'new fuel' out there and it's truly clean, that would be major news. If I were a reporter and or an editor at BusinessWeek, I would have jumped all over that story. Google News would have given me at least a hundred hits and the Dow would have jumped 200 points.

At the very least the editors at BusinessWeek should have read the article which spoke only of wind and solar energy. The last time I looked, we don't burn wind, and solar farms catch sunlight rather than burn it.

Here's a more complete story from Kendall Jones of NBC17:

"North Carolina has the potential as a state to be the Saudi Arabia of alternative fuels," District 2 Congressman Bob Etheridge said.

From offshore renewable energy to solar panels, Washington leaders said North Carolina can manufacture green energy products and harvest the clean fuel.

Secretary Salazar said his agency has cleared out bureaucratic confusion holding up potential offshore renewable energy projects.

Saudi Arabia? Okay, somebody used the word 'fuel' at the meeting. Ouch. Etheridge may not have been the only one to use the word. I expect today's Republican politicians to be ignorant because their party has been overrun with right wingers. But Democrats too have an obligation to be careful with their vocabulary. Maybe Etheridge was using 'fuel' as a metaphor. If Salazar or Chu used the word 'fuel,' shame on them. The last thing business CEOs need to hear is more about dreamosol, the magic fuel that will mysteriously appear out of the laboratory and solve all our problems.

During the Bush years, there was talk of a hydrogen economy. Hydrogen is a true clean fuel. But only after it's put in your car. It has two major problems: you have to strip carbon from fossil fuels or you have use energy to make it from water. It's a solution that isn't a solution.

By the way, here's part of a press release on U.S. Department of Energy website:

“This is a company whose mission is to reduce carbon emissions that contribute to climate change and to build a sustainable, triple-bottom-line that values people, the planet and profit,” Salazar said during his visit. “Its employees have installed more than 11,000 solar panels, producing about 2.8 million kilowatt hours of clean energy.

Their work in 2008 offset more than 74 million pounds of carbon dioxide, the equivalent of planting 5.7 million trees. These folks believe they can help change the world for the better and we couldn’t agree more.”

"Solar power produced by SAS here in Cary is a great example of the emerging energy economy, and a model for forward-thinking policies driving innovation in our state,” Sen. Hagan said. “North Carolina is well-positioned to take advantage of opportunities in this new economy. I am committed to investing in sustainable, American-made energy that will reduce our dependence on foreign oil and create new manufacturing jobs in North Carolina and throughout the nation."

The story may be covering a different event on the same trip but at least the writer of the article didn't use the word 'fuel.' There's hope. Maybe the writer of the article should hold seminars for members of Congress.

Resilience in the 21st Century

I don't honestly know what's going to happen for the next 100 years but we're having trouble producing enough energy to keep the world running at its current economic level. It's doubtful the world can support 7 billion people let alone the 10 billion people that forecasters were predicting just a few years ago.

In the 1950s, we dreamed of abundant energy, but over the years we made many blunders and allowed ourselves to be overly dependent on oil. In truth, too many people in business and government seemed to be waiting for the major breakthroughs that were supposed to supply endless energy with a minimum of problems. Nuclear energy turned out to be difficult to manage and fusion of course never happened.

It is likel that much tragedy and sorrow lies ahead. How much no one can say. Maybe we'll luck out. Maybe somebody at the last minute will invent dreamosol and our energy problems will be solved. Or maybe people in places like the U.S. will recognize that we have a problem and get serious and launch a massive program for the next ten years to diversify our energy, simplify our lives and find more efficient ways to get things done. If not, the U.S. and the world are going to need lots of resilience in the years ahead.

There's still lots of energy but the core problem is that it's not likely to be enough for 7 billion people, let alone billions more. Still, maybe we can squeeze through the hard times with ten million little solutions But to get through the hard times, we're going to need resilience, the ability to deal with a bad situation and somehow manage to turn it around, even if it takes time, lots of time.

Resilience can be found in unlikely places. Here's a story from CNN (via Leanan of The Oil Drum) about a teenage boy in Malawi who took the future into his own hands:

...amid all the shortages, one thing was still abundant.

Wind.

(snip)

[William] Kamkwamba... ...spent his days at the library, where a book with photographs of windmills caught his eye.

"I thought, this thing exists in this book, it means someone else managed to build this machine," he said.

(snip)

Armed with the book, the then-14-year-old taught himself to build windmills. He scoured through junkyards for items, including bicycle parts, plastic pipes, tractor fans and car batteries. For the tower, he collected wood from blue-gum trees.

(snip)

Three months later, his first windmill churned to life as relief swept over him. As the blades whirled, a bulb attached to the windmill flickered on.

Keep in mind that the young man got better and better at building windmills and he's still at it, while teaching others how to do more. Read the full story and check out the two pictures. Better yet, drop CNN a line and let them know we need more stories like this. If there's a future in the year 2200, it will be because of kids like William Kamkwamba, whether they are found in Africa, the United States or anywhere else in the world.

British Petroleum and Solar Roadways

These days it's not easy to know when an oil company is on the level and when they're just engaging in good public relations to keep those oil prices nice and high. The funny thing is I sort of believe in high oil prices. High prices keep everyone a little more honest. And high prices encourages alternative energy.

Look, it's a fact that oil is a finite resource. It is fact established long before global warming that oil is a major source of pollution. It is also a fact that natural gas pollutes less than light sweet crude which pollutes less than heavy crude which pollutes less than tar sands and coal. In the 1970s, long before the evidence for global warming became overwhelming, it was already a good policy to start thinking about alternative energy. That during the 1980s the United States chose to party on as if everything is fine has a great deal to do with our current economic difficulties and the continuing decline of American wages and the loss of jobs overseas. An economy as large as that of the United States cannot be sustained while paying a higher and higher premium for foreign oil.

Now the irony is that I cheer when large oil deposits are found. Why? Because the transition to alternative fuels is going to take time and it's going to require major investment of the energy that now exists.

So it's actually encouraging news that British Petroleum has found a good-size reserve of oil as reported by the Associated Press:

Nearly seven miles below the Gulf of Mexico, oil company BP has tapped into a vast pool of crude after digging the deepest oil well in the world. The Tiber Prospect is expected to rank among the largest petroleum discoveries in the United States, potentially producing half as much crude in a day as Alaska's famous North Slope oil field.

The company's chief of exploration on Wednesday estimated that the Tiber deposit holds between 4 billion and 6 billion barrels of oil equivalent, which includes natural gas. That would be enough to satisfy U.S. demand for crude for nearly one year.

But notice the caveat. It would satisfy U.S. needs for almost a year. Back in the 1930s, geological experts were talking about oil deposits that would last for a few hundred years. Natural gas, alone, was expected to last 500 years.

Those optimistic numbers of long ago have long since faded, partly because the population grew, partly because the uses of oil and natural gas expanded, and partly because the rate of discovery was never sustained over the decades. A year's worth of oil does not mean our oil problems have been exaggerated and that our refineries will soon be awash in oil for decades to come. It means we are acquiring expensive oil off our coasts that will hopefully help with our transition to new energy sources. The new find is in 4,000 feet of water and then down another 35,000 feet through rock. One good hurricane can undo a lot of hard work or at least shut things down for weeks at a time. It's good news but it requires hard-headed thinking to understand what it all means.

The thing people need to understand is that our transition was always going to come. What the early engineers were hoping is that we would use the oil age to find the next generation of energy sources. For a long time we thought fission-based nuclear energy or perhaps fusion energy would be our next big energy source. But that has not come to pass. We know now that there will be no single source of virtually inexhaustible energy. We will need multiple solutions and we will need time to figure what works and time to put various infrastructures in place. Discovering more oil gives us that time.

So it's a bit irritating to read silly articles like this (in the Guardian of all places):

BP has reopened the debate on when the "peak oil" supply will be reached by announcing a big new discovery in the Gulf of Mexico which some believe could be as large as the Forties, the biggest field ever found in the North Sea.

What the people of the industrialized world need to understand is this: if we had not been discovering new oil in the last thirty years, oil production would be dropping like a rock. At the same time, the disturbing trend for decades has been smaller and smaller oil discoveries around the world. The two exceptions, which were not easily accessible forty years ago, have been deep offshore oil rigs and exploration in the arctic. Both areas are hard to get to and expensive to develop. Depending on them is not good economic policy or good social policy. While I celebrate the extra time such discoveries give us, it is time that should not be wasted on profoundly dysfunctional public relations games.

Of course alternative energy is sometimes responsible for hype that goes in the other direction. An outfit in San Diego promises a home based contraption that can produce ethanol if you'll pluck down a nice $10,000 and take delivery of winery and brewery wastes, etc., etc. Robert Rapier of The Oil Drum has written a skeptical article.

Here's another idea that technically is feasible. The real question is whether solar roadways makes economic sense:

The Solar Roadway™ is a series of structurally-engineered solar panels that are driven upon. The idea is to replace all current petroleum-based asphalt roads, parking lots, and driveways with Solar Road Panels™ that collect and store solar energy to be used by our homes and businesses. This renewable energy replaces the need for the current fossil fuels used for the generation of electricity. This, in turn, cuts greenhouse gases literally in half.

I have no idea if a road system made of tough and rigorous solar panels makes any sense. The price tag is a little sobering: $48/sq. foot. The idea of making our highways serve a second function as solar panels has been around at least since the 1970s. But these guys are either really good con artists, delusional or brilliant. But I hope they at least get some seed money to show us what they really are or what they really can do.

Now I can visualize all kinds of problems with alternative energy. We've already seen the U.S. government blunder by underwriting too much corn ethanol which almost takes as much energy to produce as it gives us. We don't really have the right cars yet to use ethanol and we saw a sharp spike in food prices around the world. Clearly we have to think about these things. And clearly, if we are being honest with ourselves, we're going to hit dead ends at the research level.

But we've been doing research for almost 300 years, since the beginning of the industrial revolution. Research is fairly cheap. If things begin to work, you move forward. If too many problems develop, you look for alternatives. So I hope someone pays for a few parking lots made of the solar roadways material. Let's see if it works.

Reenergizing the American Economy

Wealthy Republicans these days talk a lot about free enterprise and competition but don't particularly believe what they're saying. They don't want competition. They want a free hand in acquiring a sweetheart deal from the government. They don't particularly care which government it is: ours or maybe the Chinese. These wealthy Republicans wave the American flags while shipping American jobs overseas. And they do lots of business with governments deeply involved in the business of their countries. Ironic, isn't it?

If one looks at the history of the last 120 years, what many wealthy Republicans want are monopolies and guaranteed profits. For years, the best sweetheart deals over the long haul were found in South America. Then Eastern Europe was the next best venue for such deals. Now with the rape of American industry in full swing, the best deals are with the Chinese, Indians and a number of third world countries willing to pay big bucks up front. For a time, average Americans seemed to gain some benefit from the low prices that were the result of such wheeling and dealing. But it was only for a time. Seen any low prices lately? Wealthy Republicans have discovered low wages and fat profit margins. Welcome to the new economy.

Actually the new economy has been around for more than thirty years. The truth is that people noticed but didn't notice. It began with hostile takeovers that took American companies with lots of American jobs and turned them into lean operations that didn't have the R & D to keep their place in the world economy. Too much money was going into the pockets of people who were already rich but who couldn't seem to get enough. This kind of stuff still goes on. In recent years, many newspapers have been destroyed by such corporate raiders who fail to notice that newspapers need all the resources they can muster to survive the arrival of the Internet Age.

There's actually a myth that American ideas are what's keeping the American economy afloat. Like all myths, there's a grain of truth to it but the current myth is tied to a business superstition that you can't make a profit unless you set up a factory in Vietnam or Malaysia or whatever country is currently paying the lowest wages. It's part of a canard that big corporations throw around: We are in the business of ideas! Sure. Big corporations often buy their ideas from small corporations who get their ideas from university researchers looking for venture capital. Eventually the big corporation gets its big hands on the equipment of the small corporation, unscrews the stuff from the factory floor and ships it overseas for someone else to make. With an unemployment rate of 9.4%, America's empty factories now extend from Los Angeles to Jersey City. In the long run, selling generations of American know-how cannot keep the economy afloat.

The weird thing is that Ronald Reagan seemed to get that Americans not only need to lead in the best ideas but they need to lead in at least a few key areas of manufacturing. That is, after all, how we became great in the first place. Now, like most Republicans, Reagan seemed to have the idea that what the United States needed was a lot of poor workers with no bargaining power and no safety net. But unlike the Republicans of today, he actually felt the government sometimes needs to get involved in business. Reagan in particular stimulated the computer sector. In the 1980s, the United States was behind Japan in certain areas of computer technology. But Reagan felt technology was a national priority and even a national defense issue. And some years later Al Gore and Bill Clinton got it when they helped the Internet boom any number of times (No, Gore didn't invent the Internet as Republicans pretend that he claimed, but he did help it with a number of issues; actually Republican politicians and pundits of this era aren't good at inventing anything useful but they are admittedly fairly good at inventing nonsense).

For eight years, George W. Bush sat on his hands as it became obvious we had an energy problem. In the last year of his presidency, oil rose to $147 a barrel. Oil rose so high that oil prices were a factor in the economic meltdown of last September. Very quickly, oil started going the other way as America stopped going places and as the rest of the world fell into a steep recession. Nobody was buying oil and a barrel of oil dropped to the low 30s. Unfortunately, conservative lunkheads who have trouble paying attention started traveling again and buying big cars. The Los Angeles Times have noticed the climb in prices:

At some stations in the state, $3 gasoline was old news. A Mobil station in Goleta, near Santa Barbara, was charging $3.69 a gallon; a Chevron in Shoshone, near Death Valley National Park, was posting $3.66; and a 76 on the Westside was posting $3.59...

Death Valley? Now there's a metaphor. Look, the energy crisis is here. It's not going anywhere soon. During a recession, the use of oil drops. So does the price. But that doesn't mean the problem has gone away. So far, it's not clear that a significant majority of Americans get it. Maybe a small majority get it. But for things to change a majority of business people need to get it as well.

Here and there, one sees some glimmer of hope in the business community. There are people out there who get it, who have ideas, who have the know-how or who are close to getting the know-how if—and this is a big if—they can get help bringing their ideas to the market. This requires money. The problem is that if we wait around for big business to do something, the ideas and initiative and jobs will simply go overseas. The smart thing to do is to do what Reagan did in one of his few truly smart moves: get the government involved in stimulating new technology, this time in the alternative energy field. Here's an article from CNNMoney that offers a glimmer of hope:

Thousands of jobs are riding on Ener1's efforts to build the best car battery in the world.

The start-up firm is the only U.S. company able to mass produce batteries on American soil for an automobile industry poised to make a monumental shift from gasoline to electric power.

(snip)

The company has applied for a $480 million government loan to expand its facility and hopefully allow it to land a big contract. If that happens, Ener1 says it will go on a hiring spree.

Maybe Ener1 deserves the loan and maybe not. But I know there are hundreds of small American companies that deserves such loans and that will be the backbone of a new energy sector that will power American jobs. This is the future. Not the business as usual we've seen for thirty years. Americans jobs depend on companies that develop and use American talent. Let's hope Barack Obama gets it. Let's hope obstructionist Republican fossils get out of the way. It's time for the future to arrive in America.