What you can do for your country

$300M for a battery and Friedman is flat

McCain is offering $300M for a next generation battery.  Tom Friedman has blames Bush for a bad energy policy.  Is government the fix?

McCain offered an X-Prize form of award to an entity that could develop a battery that can, I presume, make hybrids and electric vehicles, a viable economic solution.  As if enough people are not already focused on battery development.  Millions, if not Billions, is currently being invested to develop such a battery.  There really are not a lot of battery experts, scientists, or engineers sitting on the bench say, "You know I can solve the battery problem, but my reservation price for doing it is $300M".  My guess is the venture capitalists investing in battery technology are looking to make billions, not millions.

I think a great deal of Tom Friedman, but I think he jumped the shark in his commentary on Bush and Oil in the last day (Lead or Leave).  The technology theme in Friedman's article is that if Bush had pushed oil prices up post 9/11, that technology innovation in Solar and Wind would have closed the performance gap in the intermediate period and we would not be so dependent on oil.  He is talking apples and oranges when he equates Oil to Wind/Solar.

Some thoughts.....

• Investment in clean tech in the first quarter of 2008 alone has been $1.25B in the United States.  There is a lot of money going into clean-tech.  $300M won't even be seen.
• Solar and Wind have little to do with Oil.  Oil is primarily a automotive commodity.  Solar and wind produce electricity.  Solar and wind can displace a small fraction of Oil usage for things like heating. For solar and wind to have an impact in automotive, it requires low cost product, efficient distribution, and a replacement of vehicles (that will take years).  There are so many elements that need to be aligned it is best for the market to manage rather than government.
• The Grid is maxed out.  If we build a real electric car, the Grid needs to also be re-built to support new demand.
• Natural gas is the next risk.  Buildings run on electricity and natural gas.  Solar and wind will help buildings, but so would running buildings more efficiently.  Some estimates say that 20% of the energy used in buildings is a result of poorly configured building control systems.

Opinion....

• Government should focus on eliminating barriers to adopting clean technology
• Friedman should observe not opine.  He should ask "Why would Bush not act", rather than simply criticize
• Innovation is about dealing with markets, not inventing a technology (See Schumpeter).  The best battery, best solar cell, best wind farm, etc probably won't work unless we understand how it is deployed and adopted by markets.  Test that.....
• The Government should probably focus more on using the technology instead of betting on it.  For examples, they have a lot of buildings that waste energy, but are doing little to optimize what they have.  Have a competition for who can reduce the cost of optimizing buildings, that could save us 8-10% of our energy usage per year, relieve the pressure on the grid, and make space for plug in hybrids.

Put Oil Firms on Trial.....

Apparently, a "leading climate scientist" should put Oil Firms on trial for their unwillingness to submit to his believes.  As noted in the Guardian.....

"James Hansen, one of the world's leading climate scientists, will today call for the chief executives of large fossil fuel companies to be put on trial for high crimes against humanity and nature, accusing them of actively spreading doubt about global warming in the same way that tobacco companies blurred the links between smoking and cancer."

Mr. Hansen seems to have missed the class on Democracy when he was in school.  I guess he may also have missed the class on critical thinking.  As a famous senator said, "You are entitled to your own opinion, but you are not entitled to your own facts".

In the discourse of what to do about energy, CO2, the economy, etc I think it is fair for people and companies to express their opinion on various items.  I think it is fair for Mr. Hansen to express his opinion on what policies might be effective at dealing with the facts associated with his research on climate change.  I don't think he is entitled to accuse the Oil companies with lying (Blurring the links). 

One can "Blur the Links" when the counter argument is weak.  Yes CO2 is raising.  No, we are not sure why.  There are also Climate experts that think the rise may be caused by natural events.  Given that the world is a big place, with many influences, I guess it might be true that humans are not the only influence in the mix.  For example, cloud formation is not fully factored into the climate models (it is hard to do that calculation).  Could cloud formation have a positive impact on curtailing CO2 raise and warming, it seems to be part of an explanation for pack ice increasing on the south pole.  I am not an expert on this subject, but the facts make me pause before forming an opinion.

Certainly its not time to accuse people of lying.  It is perhaps time to strengthen arguments.  To simplify the explanation and provide pathways to an answer rather than vindictive.

Offshore Oil

The democrats don't want to drill off shore, the republicans do.  Who is right?

Oil is high because of speculation.  Speculators believe oil prices will continue to rise because demand is going up.  Supply is also going up, but given that oil is believed to be a limited quantity, the fact that we will run out of oil in say 2050 (a guess) is starting to influence the price now (i.e. speculation).

The oil companies are taking advantage of the increased price for oil, as they should.  So is the middle east.  And so are politicians......

Obama says, based on eia.gov data, that drilling offshore won't produce a sufficient amount of oil until 2030.  But speculation is not about "Real output", its about reserve capacity.  Drilling off the coast of the US, if successful, proves if there is or is not oil (and proves if there is a lot or a little).  If we find out that there is a lot of oil, we will know the world has enough oil for the next 100 years, and speculation will go down.  Contrary to eia.gov (and Obama), discovering more oil will push price down.  Obama is smart, so why is he not acknowledging that markets will react......

Since there is really not an immediate solution to the problem (i.e. in the next 6 months), it may make sense to blame someone.  It is hard to raise taxes on oil companies if the price goes down.  It makes a lot more sense to demigod the Oil companies and make them responsible for the price of oil, rather than really solve the problem.

But, Oil companies already have millions of acres of license to drill offshore, why aren't they drilling if it would help the market.  Oil companies have various leases to drill offshore, but few have enough time left on them to pay back the cost of discovery and drilling.  The current licenses and the others that need to be opened would extend the discovery period and payback formulation. 

But why have the republicans resisted offshore oil rights in the past.  I am not sure, but holding back on drilling in the United States is not the worst idea if you have a really long term view.  Practically, if you use up everyone else's oil first, even though you have billions in reserves, the United States gets a big advantage in 2030 or 2040 when known reserves really start running low.

As a practical matter, buying oil from the Mideast does fund terrorism, but it also buys a lot of peace.  Dubai is a peaceful place, the economy their is growing, people are happy.  A good economy in the Mideast drives democracy and change more than terrorism (at a macro level).

As with everything in politics today, the argument is not about what it seems.  Obama is using the Offshore oil issue to make oil companies look bad and keep alive his hope of taxing oil companies.  Republicans see high oil prices as a strategy for Mideast stability.

All things aside, we should ignore politics.  The way to get rid of the oil price problem is to stop using it.  We are doing that.  High prices are motivating us to do it.  If we leave the prices alone, drive innovation, and ignore Washington, we will all be better off.