Doing Something About High Energy Prices

If you want to see Americans get angry, just start talking about the price of gas. Or maybe ask a Californian about electricity prices during the blackouts. It seems that we’re enormously sensitive to the cost of energy. I myself can remember paying just over a dollar per gallon for gas just over a decade ago and the thought that the price is currently about quadruple that is absurd. Despite all of the rage and indignation, it seems we don’t have much direct control over the market forces. Or do we?

Certainly a key aspect of any market is supply and demand. As we spread ourselves further and further into suburbia and readily embrace the commuter lifestyle, demand is increasing at a rate much faster than population. (Our road capacity issues belie this, but that’s for another time.) In addition to this, the average home size has nearly doubled in the last 50 years leading to increased heating and cooling costs. Increasing demand, it would seem, is here to stay, especially with the nation’s population growth.

Despite this increased demand, our capacity to sate the supply side has diminished. We have significantly fewer refineries today than we did just three decades ago and there is a general unwillingness to explore new sources of petroleum products regardless of how great or small the environmental risk may be. Even green power options such as wind and solar are constantly fought. We also have an aging power distribution system, most of it as old as our decaying telecommunications infrastructure.

Rep. Bishop thinks we need a comprehensive federal policy to take this one head on. Congress is working on a proposal to increase exploration for hydrocarbons, build new refineries, double renewable energy, start up new nuclear plants and increase energy efficiency. Not to say that these things aren’t helpful, but I cast a wary eye at Congress when it thinks it has a solution. More often than not, such “comprehensive” solutions are loaded with line items and appropriations that cost all of us significantly more than it did before.

This isn’t to say I don’t think Bishop isn’t onto a few things. For one, he acknowledges that the nuclear repository at Yucca Mountain is a terrible idea and supports increased reprocessing of nuclear fuel, something President Ford put into place and President Carter upheld. (The Department of Energy reversed this stance in 1999, but reprocessing is moving slowly.) Certainly the prospect of greatly reducing the amount of and danger from spent nuclear fuel makes the nuclear option more attractive, though its water-intensive process limits deployment. Arizona has proven that nuclear plants can be run on recycled waste water in water-sparse areas though this still presumes a certain amount going into the system.

The legislation he is backing also proposes eliminating a number of grant programs in favor of “prizes” for ideas that benefit energy policy. Such “prizes” would be similar in function to the wildly successful Ansari X-Prize, allowing multiple competitors to seek the financial rewards. This has a strong potential to turn a $500,000 per year grant that may or may not produce results into a $50,000 price for proven ideas and technology. I’m hopeful that this kind of proposed change will decrease spending and generate better results.

Despite all of the talk of supply and demand, there’s one more factor contributing heavily towards inflated energy costs: the sliding value of the dollar. As someone who has traveled out of the country twice within the last year, I can certainly say with first-hand experience that this cannot be ignored. The Euro, for instance, buys 20% more dollars today than it did a mere two years ago. The Chinese Yuan is similarly strong against the dollar, certainly a testament to their staying economic power. With the dollar worth less, prices for everything, including energy, must go up.

Are we left powerless against the forces of a largely inept Congress and an out-of-control currency? Absolutely not. We have the power to make individual choices to save power and reduce our energy costs. In our household, we’ve chosen jobs with a commute of under three miles each way. We also continue to use a swamp cooler that consumes just 1/4 the electricity of an air conditioner that we used to think we could afford, however, I do have my eye on top rated portable AC’s from SMH for other uses of course. We have upgraded our fridge to a model that uses just $45/year in electricity. We’re also planning to replace our furnace with a high-efficiency model and replace the windows to boost insulation.

These are small things, however. Anyone who is well-to-do or is buying a home can go a step further and explore the world of personal power generation. Solar panels and small wind turbines have been favorites of those looking to go off-the-grid, though microturbines offer around 80% efficiency using the natural gas pipes already coming into your home. It doesn’t take long to find 30kWh models going for under $20,000, plenty to take yourself off the grid and sell a hefty chunk of power back to the electric company. The more ambitious can pair them up with absorption chillers to make them handle radiant heating, water heating and cooling on top of the power duties.

What a lot of people underestimate is the power of these personal decisions. One person who purchases a 30kWh microturbine produces power for nearly 29 other homes. Cutting your commute from 25 miles to 5 miles can save over 500 gallons of gas a year. Being informed on the best tankless water heater reviews can save you a bundle. Opting to use evaporative cooling most of the time and the air conditioner only during the worst days can cut peak power demand for your home alone by several hundred kWh. It only takes thousands or even hundreds of people making these decisions to have a substantial impact upon the community. These aren’t pie-in-the-sky suggestions either; they are practical solutions that most middle-class families can get behind. An extra $20,000 spent on a microturbine is a mere $120 per month in home payments, roughly what your power bill would be, and it generates income from the excess energy.

If you’re one of the folks who’s fed up with high energy costs, what are you going to do about it? 

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10 Responses to Doing Something About High Energy Prices

  1. Mike says:

    I can’t do much about the distance of my commute right now, but I’ve started hypermiling. It’s awesome. Sure it takes 10 minutes longer to get to and from work, but I’m using way less gas. On my current tank I’m on track for about 40 mpg. And that’s from a non-hybrid.

  2. jeremy says:

    I’m in the same situation as Mike, long commute and changed my driving habits to increase mpg. thought about getting a vespa but the 70 mile round trip drive from Utah County to West Valley is not the best plan. I could have a new job that is only 6 miles away which would help a ton.

  3. Bill says:

    As one who buys a full tank each and every day I can tell you that the current price hurts. That being said my problem is not a commute, it is my job. I have long said the the fall of the dollar is our biggest enemy in this price escalation of oil. 4 years ago the Canadian $ was worth a little over $.60 now it is worth over a buck. Guess who is one of our largest suppliers. The US having a moritorium on the exploration of oil is one of the largest contributers to our out of balance, balance of trade. The balance of trade is one of the largest contributers to the falling of the dollar. The falling of the dollar means we have to pay more dollars for those barrels of oil that we import. The barrels of oil that we import – the barrels of oil we export (from Alaska) contribute to an increased imbalance at a excellerating rate as the price of oil goes up. This is why it will mean much more to us if we get 1 million barrels a day out of Anwar or off the continental shelf (preferably both) vs. the Saudi’s increasing their production by 1 or 2 million barrels a day. Don’t get me wrong an increase of 2 million barrels a day would bring the price of oil down. If it were U.S. oil however 260 million fewer of our U.S. dollars would be going over seas on a daily basis. that would cut our trade imbalance by about $7 billion a month all on its own. Smaller trade imbalance will result in a stronger $. If we can get back to the Canadian $ being worth 60% of a U.S. dollar that would cut $136 a barrel oil to about $82 a barrel and that along with the increase in supply would drop the price even further.

    We need this do nothing Congress to get off their dead rear ends and support “Drill Here, Drill Now” otherwise we are going to be wishing for the good ole days of $5 per gallon gasolene

  4. rmwarnick says:

    Congress has already done the single most effective thing they could do. They closed the Enron Loophole.

    In December 2000, Congress passed and President Clinton signed into law the “Commodities Futures Modernization Act of 2000 (CFMA). The Enron Loophole was a provision that was slipped into the bill literally in the dead of night by then-Senator Phil Gramm (R-TX). This exempted trading on electronic energy commodity markets from regulation, which is how Enron was able to create and profit from a phony electricity shortage in California in 2001.

    Since then, speculators have exploited the Enron Loophole to drive up energy costs. Expert testimony before Congress indicated that crude oil would cost around $80 instead of $130 once the loophole was closed. Let’s hope the experts were right.

    As for the “drill here, drill now” argument, it’s complete nonsense.

    An Associated Press computer analysis of Bureau of Land Management records found that 80 percent of federal lands leased for oil and gas production in Wyoming are producing no oil or gas. Neither are 83 percent of the leased acres in Montana, 77 percent in Utah, 71 percent in Colorado, 36 percent in New Mexico and 99 percent in Nevada. There’s no reason to issue any more leases, the Bush administration has already handed over our public lands to the petroleum industry.

  5. Richard brings up an excellent point. Enron (and I think a lot of their mostly Republican cohorts in crime) have caused a lot of the energy problem.

    Wendy Gramm–of Enron’s board of directors–who made hundreds of thousands of dollars from the deregulation that Richard talks about, is Senator Gramm’s wifeypoo.

    Last month, when the Enron loophole was closed with the Farm Bill, McCain voted against it.

    Shortly after Enron’s demise, a company called UBS got the scraps. And they hired as their vice chairman?—Senator Phil Gramm.

    McCain’s campaign strongman? Mr. Gramm.

    See more at RawStory.com

    When McCain went from being dead in the water to the frontrunner Republican, I thought something was fishy. Now I know what.

  6. Reach Upward says:

    We have the high efficiency furnace, the low-E windows, the low-consumption fridge, the extra insulation, etc. But it simply isn’t reality for most folks to go off grid or to install the kinds of equipment you talk about.

    It could happen if early adopters set a precedent, which would spur the market to provide more of those kinds of solutions at a better price until these things became more common and affordable to the average homeowner.

    While we are all running around blaming speculators, the single largest factor in the increase of fuel cost over the past 24 months has been the falling dollar. Demand in the developing world has actually leveled off. The single greatest variable is the weak dollar, which has been a purposeful policy of the Bush administration, aimed at solving other problems. The result has been inflation, the unkindest effective tax increase of all.

    It is true that shifting to a strong dollar policy would cause some pain. But it would be more targeted than the general pain we now suffer.

  7. Bill says:

    “as for drill here drill now being complete nonsense” thanks for giving us the liberal tripe line about the unused leases, but I’ve already heard it. The unused lease head in the sand approach has nothing to do with the cost of Tea or anything else in China, I think you know that having leases does not guarantee that oil is present or worth going after or even that permits are available with the Libs use of the courts. I know that you libs would like to see the Oil companies use up some of there obsene profits drilling for oil where it makes no sense. In the mean time preserving our precious Anwar and the Continental shelf so that the 1 in a million people that will ever see either ,will have an unobstructed view of the frozen tundra or horizon across the ocean. I guess your first mistake however is believing anything that the aggenda driven associated press would tell you.

    Please make this real simple and answer the question as to whether or not drilling and getting an extra 2 million barrels a day will close our trade imbalance by $7.8 billion per month at current prices. Staying with simple questions would the reduction in our Trade imbalance by $7.8 billion per month be good or bad for the $. It is really not as hard as you Libs want to make it. Less $s going out means a stronger $ and hense lower prices. More barrels into the supply chain mean even lower prices. Its really too bad that you tree huggers cannot stand public lands to be used for the public good

  8. Bill says:

    ” the republican cohorts in crime” Oh now that is funny especially considering the news of late about the dems taking kickbacks from Countrywide. There is plenty of graft to go around but please stick with the subject of the thread which is high energy prices, Also please don’t come up with the same lame answer of Maxine Waters. She would like to Nationalize the oil companies. It just makes me feel warm and fuzzy all over to think of the government running big oil. So much for profits

  9. Bill says:

    Oh and by the way! What would happen to those waskely speculators if the price of oil were to come down because of increased supply or a strenghtening $. FYI Southwest Airlines is one of those waskely speculators as they buy their fuel years in advance. I guess I’m one as well because I have invested/speculated in the big bad oil companies and am making obscene profits

  10. Reach Upward says:

    Interestingly, Maria Anastasia O’Grady discusses in this article http://online.wsj.com/public/article_print/SB121357636070876033.html the fact that anti-drillers only have a problem with exploration and drilling when private firms are involved. They seemingly have no qualms about it when state-run organizations do it, regardless of which nation is involved.

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