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We’re Running on Empty! You’re Full of It!

Do today’s high gasoline prices foreshadow a severe energy shortage? If so, what can be done about it? Opinion asked Peter W. Huber, co-author of “The Bottomless Well: The Twilight of Fuel, the Virtue of Waste and Why We Will Never Run Out of Energy,” and Paul Roberts, author of “The End of Oil: On the Edge of a Perilous New World,” to debate the energy-supply question by e-mail. The editors -- with each party’s final approval -- condensed and edited the exchange.

On 3/22/05 at 11:54 a.m.

Roberts wrote:

We’re definitely headed for a shortage of cheap energy. Despite the assurances of the Organization of Petroleum Exporting Countries, oil is getting harder to find. Today’s high prices aren’t short-term. More generally, the prices we’ve traditionally paid for any energy have been artificially low because they excluded “external” costs like political instability or climate change. Once we start paying to remove the carbon from coal at a power plant, even California’s electricity rates will seem a bargain. Optimists insist that rising energy prices will bring on alternatives, like hydrogen or solar. But these technologies are decades from being economically viable -- and won’t be without a fundamental shift in the way we reward, and punish, energy decisions.

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On 3/23/05 at 7:11 a.m.

Huber wrote:

Paul, you bring the passion, I’ll supply some numbers. Humanity currently consumes almost 70 BBOEs (billion barrels of oil or equivalents) every year, about half of it oil, half other stuff. That’s hardly a drop out of the planetary bucket. The U.S. has 1,000 BBOEs of coal in the ground, and even more uranium. Tar sands in Alberta, Canada, and Venezuela hold more than 3,000 BBOEs. We already know how to tap these vast resources, and our technology keeps improving. If we choose, we can economically dig, dam, pump and purify all the energy we like. China will. Lethargy -- Europe’s policy -- is our other option.

On 3/24/05 2:01 p.m.

Roberts wrote:

The question isn’t how much fuel is left, but the costs of using it. Tar sands and heavy oil are plentiful, but they’re larded with carbon. (Editor’s note: Energy derived from burning fossil fuels produces carbon dioxide and many pollutants.) While we can remove the carbon in a laboratory, doing so on a global scale would require a system bigger than the world’s steel and iron industries combined. Can the market build this system? Yes, but only if we provide the right incentives -- by making carbon a cost rather than a freebie, which it is now.

On 3/24/05 3:48 p.m.

Huber wrote:

Oil is getting harder to find, prices will stay high -- but plentiful supplies don’t matter? Paul, you don’t foresee shortage. You want to create it -- with a new carbon tax. But the energy tax President Clinton proposed to a Democratic-controlled Congress in 1993 went nowhere. Sen. Hillary Clinton, maybe, in 2009? Meanwhile, Canada and Venezuela are already producing a million barrels a day of tar-sand oil, for under $15 a barrel, and they can expand production indefinitely. They will.

On 3/24/05 at 4:39 p.m.

Roberts wrote:

A coherent carbon strategy (not Clinton’s) does the opposite of creating shortages. Companies are taxed for carbon emissions, but the penalty starts low and rises gradually, over several decades, and firms can cut emissions any way they want, including buying credits from other companies. As carbon gets costlier, companies strive to cut it faster and more cheaply, a market dynamic that will yield better efficiency and the decarbonization technologies that will make your tar-sand oil truly feasible.

On 3/25/05 at 11:53 a.m.

Huber wrote:

Paul, get real! Congress won’t touch your carbon tax because most Americans hate the idea. And efficiency, sad to say, just doesn’t curb consumption. More efficient guts under the hood make Humvees, dirt bikes and monster fridges affordable; minuscule fluorescent bulbs now light our watt-guzzling plasma TVs. Per unit of energy used, we produce twice as much gross domestic product today as we did in 1950s -- and consume three times as much energy. Efficient new technology invariably delivers new uses faster than old savings.

On 3/25/05 at 2:52 p.m.

Roberts wrote:

Peter, get honest. No serious player says efficiency is the solution. Also, the real reason Congress loathes a carbon tax isn’t because “most Americans hate” it (nice try), but because powerful coal interests and utilities see the tax as inherently anti-coal -- and it is, given current “dirty” coal technology. But suppose we combined the tax with a serious research and development push for technology that lets us decarbonize -- and thus rehabilitate -- coal? We’d speed development of a “clean-coal” technology.

On 3/25/05 at 7:12 p.m.

Huber wrote:

Anti-nuclear greens did far more for coal than Congress ever did. Since 1980, we’ve boosted nuclear output enough to displace 200 million tons of coal a year. It would have been 600 million tons if we’d finished building the plants in the pipeline. We’re burning 400 million additional tons of coal instead -- a billion tons in total, and still rising. China now leads the world in developing next-generation pebble-bed reactors. It will be heavily nuclear in 20 years.

On 3/26/05 at 8:06 a.m.

Roberts wrote:

Nice hook, Peter, but your bait’s old. Yes, nukes have been demonized by the left, which refuses to acknowledge advances in reactor design. Yes, given future electricity demand, no option should be ignored, especially a zero-emission one like nuclear. Yet even the utilities worry about nuclear plant security, safety and economics. As with other “silver bullet” technologies, nuclear is too often touted as the endgame, when, at best, it can be only a piece of the next energy economy.

On 3/27/05 at 6:32 p.m.

Huber wrote:

The “next” energy economy is electricity. Electricity has met more than 80% of the growth in U.S. energy demand since 1980. It now fuels more than 60% of our GDP. Even with modest battery packs, hybrid cars will soon power shorter trips off the grid too. Expensive oil hasn’t tanked the economy because power plants don’t burn it. Only two fuels can supply limitless, cheap power today: coal and uranium. We’ve got lots of both.

Roberts concludes:

If the issue were just quantity, we wouldn’t be having this debate. But as most serious observers understand, hydrocarbon energy comes with costs -- among them, carbon. This reality is inconvenient for preachers of the gospel of limitless supply. But it has to be part of our next energy strategy. Price is indeed a powerful force and can unleash crucial new energy technologies and new supplies. Yet until the market is made to “see” the underlying costs of energy, the “new” energy economy will simply repeat the mistakes of the old one.

Huber concludes:

We consume about 7 billion barrels of oil a year, and 11 BBOEs of coal, gas, uranium and hydroelectric power. More than 80% of the total comes from North America. The U.S., Canada and Mexico -- our three largest suppliers, in that order -- provide about 60% of our oil. Electrification is shifting demand to the not-oil side of the ledger, where coal and uranium supplies are essentially unlimited. Oil markets are unstable because unstable governments control the cheapest oil -- but Alberta’s tar contains far more oil than Arabia’s sand. Severe energy shortage? Long-term crisis? I just don’t see it.


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