Alternative Energy

A recent 100 Hour Board question asked about President Bush's Advanced Energy Initative which he announced at the 2005 State of the Union. He said:

Keeping America competitive requires affordable energy. And here
we have a serious problem: America is addicted to oil, which is often imported
from unstable parts of the world. The best way to break this addiction is
through technology. Since 2001, we have spent nearly $10 billion to develop
cleaner, cheaper, and more reliable alternative energy sources -- and we are on
the threshold of incredible advances.

So tonight, I announce the Advanced Energy Initiative -- a 22-percent increase in clean-energy research -- at the Department of Energy, to push for breakthroughs in two vital areas. To
change how we power our homes and offices, we will invest more in zero-emission
coal-fired plants, revolutionary solar and wind technologies, and clean, safe
nuclear energy. (Applause.)

We must also change how we power our automobiles. We will increase our research in better batteries for hybrid and electric cars, and in pollution-free cars that run on hydrogen. We'll also fund additional research in cutting-edge methods of producing ethanol, not just from
corn, but from wood chips and stalks, or switch grass. Our goal is to make this
new kind of ethanol practical and competitive within six years. (Applause.)

Breakthroughs on this and other new technologies will help us reach
another great goal: to replace more than 75 percent of our oil imports from the
Middle East by 2025. (Applause.) By applying the talent and technology of
America, this country can dramatically improve our environment, move beyond a
petroleum-based economy, and make our dependence on Middle Eastern oil a thing
of the past. (Applause.)

(http://www.whitehouse.gov/news/releases/2006/01/20060131-10.html)

Thus the question posted on The Board:
I have read some of these options and it would mean there would be an increase in cost for fuel. Would you be willing to pay more for an alternative fuel form?

Some of our increased need for fuel comes from the huge amount of SUV's in the U.S. I read an article some time ago saying that the U.S. is the only country in the world that has not improved in fuel efficiency. In fact, we have gotten worse, mainly due to the increase of SUV's. If we were able to improve our fuel efficiency, do you think that would be enough?


I think it is very important to look at alternative fuel options. First, it is important to research them for the sake of science and improved understanding. Second, and more important, we should seek to make these systems more viable... and even feasible.

Personally, I do NOT think the American people at large will pay 5.00 per gallon (or equivalent) just to be environmentally friendly. Every law of economics says that people will freak out about this. Demand depends on the intrinsic value of a specific good. Obviously, environmentalism doesn't sell nearly as well as machismo. That is why ugly Hummers are still powerful sellers... and why the Republican party tends to win elections.

But, if you notice, there has been a HUGE spike in hybrid vehicle technology over the last few years. Suddenly hybrids are mainstream. Ford Motors just dumped millions of dollars into Hybrid car commercials for the Super Bowl (which were disappointing… I miss Jim Henson’s Kermit voice). They obviously think there is a selling point for efficient cars (I’m just wondering why they don’t add some extra batteries so I could plug my [future] Hybrid in…).

Why are Hybrid cars growing so rapidly? Because people have decided they are desirable. 1) Fuel prices have pushed many people to think more efficiently. 2) The Government is offering tax breaks or limited privileges to hybrid car owners (such as access to HOV lanes). Thus, Hybrid cars have become desirable. Back when they were just "environmentally friendly" nobody really cared about electric cars. Now they are actually viable, relatively cheap, and useful.

So, I think it is impossible to mandate a switch to alternative fuels. But, through research and development—and good marketing—I think alternative fuels can become viable. But, there are some serious obstacles that we need to overcome.

I was watching an old episode of the West Wing the other day (can I just say... hooray for TiVo and DVR... how did I live?) where Josh hit a hybrid car while test driving a huge SUV (and talking on a cell phone). To respond to it, he invited spokespersons from various alternative energy groups. They then proceeded to argue about the strengths and weaknesses of their various plans. It was actually a well-written exchange outlining issues with alternative fuel technologies. Currently, none of the options are truly viable. All of them have issues to overcome.

If we want to overcome our dependence on foreign oil, I think Bush is putting us on a good path:
1) Nuclear Energy - it is safe and already viable. I know, I must be a psycho anti-environmentalist for even suggesting that we harness the power of the atom for good. For Pete's sake... we have the uranium, let's put it to some good use. Then let's store it in Nevada (ha... just kidding. Harry Reid is now going to fly in on a broomstick and throttle my neck).

2) Coal - I liked Bush's call for zero-emissions coal technology. That is viable... and we have a 200 year supply of coal. So, let’s use the resource we have and make it work well.

3) ANWR - The Alaska National Wildlife Reserve: millions of acres of protected
wilderness sitting on a huge cache of petroleum. And, using current technologies, we can get at 90% of the oil by only affecting 10% of the land. That is a pretty good trade off... and sensible. But, of course, everybody has a hernia when you mentioning regulated drilling on a wildlife reserve. Oh well.

So, the solutions are there. We need to show that they are viable and
appealing. Personally, I don't care if people need to buy SUVs. I'm annoyed that
"SUV" has become a hiss and a byword among liberals. I drive an SUV and get 25
miles to the gallon. That ain't bad!

Oh yeah, and just because people choose to buy less efficient cars doesn't mean that engine efficiency hasn't improved DRAMATICALLY. Europe has improved efficiency standards by forcing people to buy tiny cars and charging 10 dollars a gallon. The US fills consumer demand and seeks to make the in-demand cars more efficient. But, I guarantee you that the Ford F-350 is more efficient today than it was 5 years ago.

Anyways, my point is, let the market do its work. The government should
support research and development into alternate fuel options. The joy of
capitalism is that people act in their best interest, and aggregate best
interest is often a good way to go. I want to scream when tree-huggers say: "The
government should force everybody to buy Hybrid cars." Argh... top ten ways to
tank the US economy (which, by the way, keeps the world economy running too).

I'm a big fan of Bush's energy initiative. I'm going to go read some
more about it. Basically, I think the Democratic party are only criticizing his
initiative because they couldn't make the idea fly first.

That is all.

Horatio the Capitalist (who would buy a Hybrid car... but not an ugly one)