Wednesday, March 21, 2007

Global Warming?

After a discussion on global warming with my daughter, Nicole, I realized I have not really addressed this issue in a direct way in this blog. And, though I'm not an environmental scientist, my background and interest in science, engineering and economics mean I may be able to put a practical spin on the topic, a rare feat in today's politically charged environment.

First, the concept. That increased carbon dioxide and other greenhouse gases (GHG) will, all else being equal, increase the temperature of the earth, is beyond dispute. The kicker in that statement is the "all else being equal" qualifier, because another sure bet is that in the environment, all else is never equal.

What this means is that, to evaluate the long term effects of mankind's GHG on the earth, you have to fully understand and quantify a number of other factors, such as:
  • The proportion of GHG created by man's activities vs natural activities. A huge volume of GHG is created by natural processes, ranging from digestion of creatures to decomposition of organic material and volcanic processes.
  • The earth's GHG limiting actions. Will vegetation grow faster (and therefore absorb more carbon dioxide) in an atmosphere with more carbon dioxide? Will the oceans absorb more GHG, and if so, how will that effect water supported vegetation? Will the oceans absorb or release methane, a very potent GHG? Will warming lead to more water/clouds in the atmosphere thereby offsetting the GHG effect with reflective effects?
  • Long term storage mechanisms. The GHG generated by burning of hydrocarbons was, after all, stored by previous generations. By using them, are we restoring the natural balance. And, if left in the ground, would these hydrocarbons eventually perculate to the surface in even more potent forms, such as methane? Will the creation and storage of hydrocarbons increase in an era of increased GHG?
  • How does the GHG timeframe mesh with solar variations and the end of the hydrocarbon era, which obviously is approaching at some rate? If you doubt that the hydrocarbon era will be ending any time soon, see previous posts about the viablility of alternatives and conservation technology at today's prices.
  • How significant would the effects of global warming be in the grand scheme of things. After all, sea levels have varied over time much more than the effects predicted by even the most ardent believer in global warming. Ice ages have been created by volcanoes and meteorite collisions. What seems huge to us today could be small, or even offsetting, to numerous possibilities we can barely fathom.

So the answer, after considering all these factors, and more I haven't listed, or even thought of, is....drum roll, please.... I don't know, and no one else does either.

So, what do we do? We conserve when it makes sense. We use lower carbon sources when feasible, say using natural gas rather than coal. We invest in lower carbon energy alternatives when it makes sense. We try to rationally balance the very real issues of today with a low risk, high consequence problem tomorrow, without trying to enforce draconian changes which destroy our economy, dramatically decrease our standard of living today or create black markets to circumvent the draconian measures imposed.

And, that, in large measure, is the process I try to help with in this blog. So, read along, participate in the process. Along the way, you can make good investments, you can save money, you can contribute to the solution, and while doing so, you can raise our standard of living. That is a process, it seems to me, we can all look forward to and be proud of.

Monday, March 19, 2007

Energy Issues Today

Since I conceived this blog, I've surfed the internet quite a bit to get a feel for what is out there in the field. What I observed is pretty interesting and in some cases, shocking. What follows are some of these observations and my effort to help explain some energy issues:

1. There is great hunger out there for free, or cheap energy. This, in itself, is good, but the underlying tone and reasons for this hunger are a bit worrisome. Most believe that today's energy is outrageously expensive. This is true only in the light of comparing it to recent history. It is cheap compared to the 70's and dirt cheap compared to all of history prior to the petroleum era. Can you imagine what it would have cost to push a 2000 lb car 30 miles before oil? So much that it would be unthinkable for anyone other than a king to even consider it. And yet we can do it for approximately $2.50, less than half an hour's wages at minimum wage. Prior to oil, an ordinary person would have spent a substantial part of their day trying to provide basic energy for cooking, keeping warm and moving about. In fact, for the past century we have been treated to such cheap energy, we cannot imagine the relatively expensive energy of 99% of recorded history. And that cheap energy has created, and still creates, the prosperity we now enjoy. But ultimately prices are a function of their effect on supply and demand, and on this basis, current prices are actually about right. For more on why this is true, see my previous post on how much energey will cost.

2. There is a perception that energy prices are manipulated, or there is some conspiracy. This is true to the extent that everyone out there who owns or can generate energy will try to get the best price they can for it, just like for any other commodity. However, there are far too many suppliers out there for anyone to control the price. Energy is an internationally traded commodity and there are dozens of major oil companies out there, along with thousands of smaller suppliers. And, that is just for oil. Consider all the other potential sources from solar to nuclear to coal and you have hundreds of thousands of suppliers and billions of customers. Energy costs will fluctuate wildly, based on supply and demand and the nature of the short and long term markets discussed in a previous post, but no single entity is even remotely able to control the world price of energy.

3. Very few people out there have enough scientific or economics background to reasonably evaluate their options. While I've been on the fence previously about our educational system, this revelation is certainly an indictment of that system. There is so much snake oil out there and so little ability to evaluate it, I wonder how we can survive as a society. I see people out there claiming they can run your car on water. I see others talking about generating power with a turbine connected to the discharge of a pump ( a perpetual motion scheme, so outrageous the US Patent office rules out awarding patents for them). I see folks confidently talking about spending tens of thousands of dollars on solar panels, when a few thousand in insulation and efficiency improvements would produce the same result.

4. Most relate free energy to attractive economics. In reality, most energy is free at its source. Oil was created by natural forces and is free for taking by the owner. There is enough solar energy falling on 200 square miles of the earth's surface today to satsify all current demand. I could go on and on similarly for nuclear fuel, coal, wind, tidal, wave, geothermal. The cost for making it available for use is a function of who owns it and how expensive it is to gather it. An understanding of science and economics is needed to evaluate it and to effectively bring it to market.

I hope this raises understanding of our energy issues, or at least has you thinking about it. I believe our ability to continue to create prosperity depends on this understanding. To the extent we fail to come to grips with these issues, our standard of living will begin to decline.