Summary:
Andy Grove calls for a strategy that can deflect our march toward persisting conflict by strengthening our energy resilience. The strategy includes a policy that favors sticky energy (i.e. electricity) with multiple sources and aggressively moving vehicles first toward dual-fuel mode and ultimately to running on just electricity. Focus in the past on energy independence was misguided: talking about “independence” in terms of one product in an otherwise seamless global economy is a contradiction. Energy resilience is what's needed instead, i.e. strengthening our ability to adjust to such changes. Because electricity is the stickiest form of energy (it stays in the land where it is produced), and because it is multi-sourced, it will give us the greatest degree of energy resilience. Shifting to electricity has the added advantage of helping to mitigate a major environmental threat. However, we can't rely on market forces alone: absence of common interests among the industry players is a major obstacle to action. (Published: 01/08/08)
Summary:
- significance of US first a supplier, and later as a consumer of oil has decline
- relative decline as a supplier accelerated in the 70s, after OPEC was formed, and again when it flexed its muscles by precipitating the oil shock
- significance as a customer started to decline in the early 90s as some of the developing Asian economies started to grow at a rapid rate, requiring prodigious amounts of petroleum
- OPEC has enormous control over its customers
- energy is the lifeblood of all economies
- availability of petroleum determines whether an economy grows or declines
- availability of petroleum determines employment levels
- in turn determines national political stability
- Project Indepedence
- kicked of by Nixon in early 70s
- goal
- “At the end of this decade, in the year 1980, the United States will not be dependent on any other country for the energy we need to provide our jobs, to heat our homes, and to keep our transportation moving.”
- dramatically failed to meet that goal
- after Nixon, president after president set similar gboals
- every target was missed
- became more and more dependent on imported petroleum
- net energy imports doubled between 1970 and 1980, and then again by 1990
- goals were unwise
- faulty goals lead to the wrong actions
- problem:
- US became more and more integrated into a global economy
- goods, information, and oil move unimpeded across national boundaries
- oil flows toward the highest bidder, just like all other goods
- talking about “independence” in terms of one product in an otherwise seamless global economy is a contradiction
- correct goal
- to strengthen our energy resilience
- we must protect the U.S. economy from interruptions in the supply of such a critical commodity
- whether those interruptions are related to natural or political causes.
- the appropriate aim is to strengthen our ability to adjust to such changes
- how? by increasing our reliance on electricity
- electricity: energy that sticks
- oil
- moves to the highest bidder
- Fleets of tankers carry it across oceans day and night
- natural gas
- can also move around, but with extra difficulties
- on land, it can be transported in pipelines
- to carry it across oceans requires liquefaction and expensive, high-tech ships that can carry this liquid in strong, deeply cooled containers
- electricity
- it is “sticky”:
- it can be transported only over land
- i.e. it stays in the continent where it is produced
- it is a multi-sourced form of energy
- petroleum, coal, wind, hydroelectric, nuclear and solar
- if one source suffers a shortage, we can produce electricity from another
- because electricity is the stickiest form of energy, and because it is multi-sourced, it will give us the greatest degree of energy resilience
- nation will be best served if we dedicate ourselves to increasing the amount of our energy that we use in the form of electricity
- transportation: hardest nut to crack
- transportation uses more than half of all the petroleum consumed in this country
- conversion will not be easy
- requires substantial growth in generation capacity as well as in the capacity and reach of the transmission infrastructure
- requires that vehicles be able to run on electric power
- with the size and weight of ordinary automobiles, current technology allows electric cars to run only 100 miles or so before their batteries need to be recharged
- many drivers can live with this limitation most of the time
- but few will find the condition satisfactory all of the time
- new technology
- often shows up in this manner: it is not completely satisfactory in the beginning, but good enough to get going
- such approaches are known as “disruptive technologies.”
- starting low and moving up
- waiting game
- automobile industry,
- has been waiting instead for batteries to improve until they can allow electric cars to enter the marketplace with the same driving range as gasoline-fueled cars
- battery developers
- have been waiting for demand from the automobile industry to develop before fully committing the resources required to do the job
- generation and transmission infrastructures
- have not been built up to service the potentially explosive demand from transportation
- our exposure to the vagaries of oil supply is growing by the month
- must accelerate conversion to electricity in a major way
- U.S. government should lead the way by requiring that a growing percentage of new cars be built with dual-fuel capability
- dual fuels
- dual-fuel cars would have both an electric engine and an auxiliary gasoline engine to augment it
- dual capabilities are often built into machines to help with technology transitions
- e.g. laptops with both wired and wireless connection
- forces of disruptive technology would eventually bring about improvements in battery technology, ultimately allowing the production of an all-electric car with satisfactory driving range
- process won’t happen quickly enough on its own
- no matter how fast the production of dual-fuel cars is ramped, replacing the bulk of the approximately 250 million cars on the roads in the United States with new cars will take a decade or more
- retro-fitting
- need to retro-fit the low-mileage part of the fleet first
- estimates show that converting these vehicles to dual-fuel operation, even with electricity providing no more than 50 miles of driving range between daily recharging, could cut petroleum imports by 50 to 60 percent
- task requires major effort and investment
- may need to apply tax incentives to offset the cost of the retrofit and couple them with deep discounts on the cost of electricity used by the vehicle over some initial period, such as one to two year
- environment
- shifting to electricity has the added advantage of helping to mitigate a major environmental threat
- shift from petroleum-based vehicles to electricity-based ones would move the locus for addressing carbon emissions from millions of individual vehicles to far fewer centralized electricity-generating plants
- controlling emissions thus becomes an industrial task, easier technologically.
- estimates indicate a potential reduction of carbon emissions of around 50 percent through such a shift
- can't rely on market forces
- automobile manufacturing, battery production, and the generation and transmission of electricity are all represented by different industries
- each with its own financial aims
- absence of common interests is a major obstacle to action
- requires the coordinated commitment of several industries
- startups and new ventures, not limited by the economic rules of established industries, can break the gridlock in time
- but: we don’t have the time
- Condi Rice: “The politics of energy is warping diplomacy in certain parts of the world”
- oil has been a major factor in many wars, and it could be again
- Kissinger: “Today’s relationship between China and the United States is very similar to that of Germany, a rising country at the turn of the 20th century, and Britain, an established one. Their conflict over resources eventually led to war.”
- We are in a period of time in the world today where there is a shortage of resources.
- we will face “an era of persisting conflict.”
- need for a strategy that can deflect our march toward this “persisting conflict” by strengthening our energy resilience
- policy that favors sticky energy with multiple sources and that aggressively moves vehicles first toward dual-fuel mode and ultimately to running on just electricity provides the answer.
