A 'Switch Grass' Energy Solution?

“Why do people only believe bad news about energy?” This question was often posed by Julian Simon, a now deceased University of Maryland professor of business administration, who had the courage to argue that “peak” theories about energy resources are typically hoaxes.

Unfortunately, President Bush appears to be a “peak oil” believer who has a strong predisposition that using carbon fuels is somehow bad.

John Fund, writing in the Wall Street Journal, warns us that Bush’s upcoming State of the Union speech is likely to chide us once again that we are “oil dependent.” From there, Bush is expected to out-Jimmy Carter even Jimmy Carter. Maybe we won’t be encouraged to see if we can make gasoline out of peanut shells, but we are evidently likely to hear Bush advance the usual litany of Democratic Party energy alternatives, with a focus on biofuels designed to replace oil and natural gas, regardless whether the alternatives are proven or practical.

Julian Simon, to prove his point, went back to an 1865 book written by Englishman William Stanley Jevons, a renowned social scientist of his day. The treatise, titled “The Coal Question: An Inquiry Concerning the Progress of the Nation, and the Probable Exhaustion of Our Coal Mines,” argued that England was about to exhaust all available coal resources which inevitably would mean the collapse of the industrial enterprise upon which Great Britain’s mighty empire depended. Jevons despaired that, “It will appear that there is no reasonable prospect of any relief from a future want of the main agent of industry (namely, coal).”

In contemplating his form of the Malthusian nightmare, W. Stanley Jevons was the M. King Hubbard “peak oil” theorist of his day. As in the current writings of oil industry investment banker Matt Simons today, Jevons analyzed coal mines showing mine-by-mine the estimated amount of coal, the annual consumption of that coal (depletion ratio), and the duration of the supply, anticipating with uncanny precision the “bell shaped curve” typical of M. King Hubbert modern-day “peak oil” graphs.

In his classic 1996 book, “The Ultimate Resource 2,” Simons explained why Jevons was flat wrong:

What happened? Because of the perceived future need for coal and because of the potential profit in meeting that need, prospectors searched out new deposits of coal, inventors discovered better ways to get coal out of the earth, and transportation engineers developed cheaper ways to move the coal.

Insightfully, Julian Simons documented a series of authoritative U.S. Geological Survey “doom-and-gloom” energy predictions, such as 1885, when the USGS declared that no oil would ever be found in California, and 1914, when the USGS concluded that at most the U.S. had a 10-year supply of oil left before it was all gone. When did Julian Simons think we would run out of oil? “Never!” was his answer. Today the Energy Information Agency estimates that the world has 1.2 trillion barrels of oil in proven reserves today, more than ever in recorded human history, despite oil consumption in the world nearly doubling in the last three decades. Julian Simon would contend that we will all have nuclear batteries running our automobiles long before we ever come close to running out of oil and natural gas.

Still, if Bush is determined to pursue an alternative energies theme, he should find a receptive audience in a Democratic Congress. This will reinforce Bush’s unfortunate prediction in his first press conference the day after the November 7 election “thumping” that a Democratic Congress will be easier to work with on certain issues, such as passing his “comprehensive immigration reform” package that continues to include what conservatives would consider a “guest worker amnesty.”

Democrats love subsidies, so biofuels will be music to their ears. Unfortunately, we now expect Bush to steer clear of the types of alternatives conservatives have traditionally favored—such as drilling in Alaska or offshore, or converting the shale oil resources in the Rocky Mountains much as the Canadians are converting the Alberta oil tars to gasoline. Very possibly, the Alberta oil deposits in the tar sands and the Rocky Mountain oil shale trace back to the same geological origin in different forms. At any rate, focusing on their abundant oil sands resources, Canada has become our largest supplier of oil, whereas our oil shale is left in the ground. We just recommend that President Bush should avoid eye contact with Massachusetts Sen. Teddy Kennedy who is all in favor of restricting our use of hydro-carbon fuels, unless it involves putting windmills off shore from his beloved Cape Cod.

How can the Bush family, which claims certain roots in the oil industry, father a son who believes that switch grass and wood chips are our energy future? Wasn’t George W. Bush himself once in the oil business, or was that venture such a failure that he prefers to forget about it?

Republicans suffered an electoral defeat in November 2006 in large part because conservatives have become disillusioned with President Bush’s proclivity to downplay or avoid altogether cherished conservative themes. The second term is littered with a series of such failures, from the nomination of Harriet Miers to the Supreme Court, to Dubai Ports, to our excessive budged and trade deficits. Now, is Bush going to abandon conservatives once again on energy policy, amplifying the themes he launched in his infamous “addicted to oil” 2006 State of the Union speech?

Yes, the United States needs to move toward energy independence. But continued reliance on oil needs to be part of that plan. In just one deep-earth find, the Jack Field in the Gulf of Mexico, Chevron increased by 50% the estimated oil reserves of the United States. How much more oil is there offshore, in Alaska, or at deeper levels than we have yet drilled within the continental United States? The “Deep Trek” project of the U.S. Department of Energy documents that we still have abundant natural gas at deep levels within the continental United States. We should focus on continued development of liquid natural gas technology, instead of focusing on ethanol, a fuel that uses more hydro-carbons than it saves. If the government subsidies were removed, the ethanol industry would collapse in the United States, as sound economic thinking dictates it should.

With President Bush increasing our military presence in the Middle East, Bush needs conservative supporters now more than ever. Someone should advise Bush that an energy program more attuned to Democrats is ill considered, unless Bush’s goal is to further discourage conservatives that the Republican Party is an appropriate home.

In two more years, Bush can plan to join his father and William Jefferson Clinton on what is becoming the famous ex-presidents’ perpetual world tour. But in so planning, is it really necessary for Bush to advance an energy policy that only serves to promote themes on which Hillary Clinton can be expected to run?