API Energy IQ

At a time when Americans are focusing on energy issues and policies, a survey from API and Harris Interactive finds that most U.S. adults have a fundamental lack of knowledge regarding energy demand and supplies and the role of America's oil and natural gas companies. In fact, when presented with 23 multiple choice questions, on average more than 25 percent of respondents said they were "not sure," and in many cases people chose the response that is farthest from the correct answer. Test your knowledge on 10 questions.

Think you understand energy issues? Click here to see the questions and comments on TheOilDrum.com.

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It Aint Easy Being Green

Green Challenges

I try harder than most both to live an environmentally frugal life and to prepare for an era of fossil fuel scarcity. I garden (fruit trees, berries, vegetables, flowers), and have been gardening for over 40 years. I have a compost bin, and I grow worms in my garage (to reduce waste to the sewer and waste systems). I bought 5 expensive “Earth boxes,” essentially potting-mix based hydroponic systems, including wheels to move them around to the best areas of the yard depending on season.

Outside of my gardening efforts, I have replaced every light possible with CFLs (and will use LEDs when available). I’ve added insulation to the attic. We use a portable outdoor clothesline. I have a sun oven. We drive a Prius, when we drive; I have used only public transit (D.C. bus and metro) for the past 4 years. I could go on and on.

And I’m discouraged.

Whether it’s due to climate change, or just the gardener’s perennial luck of the draw, my gardening yields in recent years have been at best mediocre. Animals (from deer to raccoons to rats) have taken their toll. I’ve built a deer fence (that the deer smashed into and I repaired). I (hate to admit) I have put out a rat trap. Still, the birds, raccoons and squirrels take their pick of the best of everything from berries to tomatoes. And they’re getting slim pickings too.

This year I decided to try planting more “heritage” varieties of tomatoes and lettuce (for starters). I assumed they would be more resistant to variations in the weather, they would not need as much (or any) artificial fertilizer, and they would taste better than hybrid varieties. That was the theory. I’ve never had such skimpy yields; tomatoes with blossom end rot; the pumpkins and squash have no fruit set. I blame that (in part) on the nearly complete lack of bees.

And if everything worked fine and yielded as much as I used to get in New England, the effort would still be significant. And I’m willing to pay that price of effort, materials, etc. Now I pay the price and get very little in return.

No matter what the advertising brochures claim, the Earth Boxes, I hate to report, yield far less than simply planting veggies in the ground. CFL bulbs (especially the more expensive dimmable versions) burn out in as little as 3 months – not 5 years.

Recently I tried a different approach. I asked for a solar panel assessment, knowing I had some daytime shade. Result: You’d have to cut down all the trees around your house (illegal in D.C. unless the trees pose a danger or are diseased), since if one cell of one panel is shaded, the whole panel’s output is diminished. And if one panel’s output is diminished, the whole series work inefficiently. Just not worth the $25-$30 thousand investment, even though I know electric costs are going to skyrocket while electricity availability will become increasingly intermittent.

I also visit and read nearly every post on theoildrum.com, daily.For another wakeup call (if you need one), read “Gail the Actuary’s” post on the “oildrum,” at http://www.theoildrum.com/node/4381, titled “The Path From Petroleum Shortages To Electricity Shortages .” If Gail is right (and she is certainly persuasive and informed), we can all look forward to a large assortment of unexpected consequences from peak oil supplies, including intermittent availability of electricity.

Here is an excerpt from Gail's recent post:

"The issue I see is that if we know we are very likely to have electrical difficulties within twenty years, it does not make sense to start a transformation to a more electrical society. For example, if we start building a lot of electric trains, we are likely to discover that that we don't have the electricity to operate them when they get built."

Now if I am working this hard to become a darker shade of green, and getting so little effort in return, what about the other 99% of society who probably either are ignoring peak oil issues or doing very little to prepare. If you think you can just dig up a patch in your back yard, buy some seeds, and haul in the veggies to supplement your grocery bill… good luck with that.

Still, I am something of a perennial optimist. I believe if you try hard enough to improve your processes, learn from past mistakes, and continue trying, you’ll both be better off and provide credible insights for others how to succeed when they decide to try out gardening or energy saving strategies. Or at least I hope it works out that way.

Investing in a Post Peak World

It is only prudent to prepare for a post-peak Oil world, and part of that planning is financial planning. Specifically, I've been wondering whether there will be a pronounced use of online commerce when automobile fuel cost becomes scarce or prohibitive. If people flock to the web to make their purchases, then it follows that home delivery of those online purchases will also increase. OK, so does that mean that UPS or FEDEX could be stocks to buy as part of a personal hedge against the difficulties of peak oil?

I contacted Jim Hansen, a financial consultant at KMS Financial Services based in Seattle, Washington. He posted on The Oil Drum and writes an investment newsletter titled the “Master Resource Report.” I asked Hansen specifically about whether he thought FEDEX or UPS might be good Peak Oil investment plays. My paraphrase of his reply follows.

First, he's not giving any advice on the companies specifically but suggested instead some guidelines for evaluating them or other delivery services.

1. First, consider the GDP issue raised by Roger Bezdek and Robert Hirsch. With a flat to declining GDP, consumer spending will decline. That decline could be significant and last for a long time. This could hurt online sales and economic activity in general.

2. Many times the shipping cost is a large percentage of the cost of the item being shipped. At what point do consumers flinch and say “I'll pass”?

3. In every case, localization is important (and among other things, reduces the use of shipping long distances).

4. High value items will probably benefit from the use of delivery services, but probably not low-value items such as CDs, books, etc.

5. The primary advantage of FEDEX or UPS is speed versus shipping by rail or ship. Cheap energy is an important factor to make the FEDEX or UPS model work.

6. And the business model is critical. Jet fuel cost less than .41/gallon recently, and is now about $3/gallon. Airline fuel expenses are now 30-40% of total costs, more than labor for the first time ever. What happens when fuel costs approach 50% of costs? If they try hedging forward that won't help since markets will realize that future fuel supplies will be constrained, essentially forever.

So if online commerce goes down with the economy in a post-peak world, what are some other investment alternatives beyond the obvious (oil services for example). Other companies with an online presence such as Disney?

I'd love to hear your thoughts.

What the heck is "Peak Oil"?

The term "Peak Oil" hasn't yet gone mainstream, but you are hearing that catch-phrase occasionally on mainstream financial sources and even in USA Today. Do you wonder what that term means? Click here for a very simple explanation, developed by "Gail the Actuary," one of the contributors to The Oil Drum -- a great site for information on this topic and for discussions about energy and our future.

USA 2034: A Look Back at the 25th Anniversary Year

Alan Drake presented a great piece, at this year's ASPO Conference in Houston Texas, of optimistic fiction about the US, 25 years from now, and how we managed to do the right things. Alan's story was also posted on one of my favorite sites, The Oil Drum.

Here is an excerpt from this post, along with a link to the post itself on The Oil Drum. Here is a brief excerpt from his story. I hope this whets your interest enough to read the whole thing.

After an extended period of bewildering, painful and rewarding transition, the people of the USA finally feel that they have found their feet underneath them, with a clear and hopeful path to the future. Oil consumption is down to 6.6 million barrels/day, 30% of our 2007 peak oil use, and CO2 emissions are 26% of their 2011 peak, a matter of pride for most Americans.

As we close this year of 2034, for the first time in a quarter century, we can now say that next year looks to be better than this last year. Our problems are not solved, but we know the solution and we are confident of our ability to work and sweat towards sustainable, workable solutions !

Go read the whole story. It is the most credible and optimistic scenario I've yet seen.

Peak Oil Hits the Amish (Continued)

Amish Country, May 2012

Jacob had promised Josiah that he would do his best, but nobody realized either how difficult it would be to get power from the sun or --having set up a magnificent solar array-- what the consequences would be. They would be good and bad.

To understand part of the problem, you must understand the Amish approach to technology in general. They evaluate every technology choice based on its affect on the community – the Amish community. They deliberately pick and choose technologies to maintain the special nature of their community. And that approach is inward-looking.

They struggled with choices when it came to a public health requirement regarding milk storage – it had to be kept chilled (refrigerated), and had to be stirred automatically. Chilling (and automatic periodic stirring) requires electricity, and they had been averse to running electricity to their barns. Instead, they used diesel generators to create the electricity needed to chill and stir the milk.

Yet even that seemingly odd solution left open the possibility of allowing more technology into their communities. In fact, an Amish bishop –long before the energy emergency—said that “ To make a living, we need to have some things we didn’t have 50 years ago.” So what where the non-cultural barriers to the use of solar power?

For starters, the sheer cost of setting up the vast solar arrays surprised the community. They also had to decide whether to store the energy for a rainy day (or for night use), or to save money by not storing the power at all. Not storing the power meant using the English grid as a battery -- essentially sending excess electricity back to the utility grid. This “ran the meters backwards,” saving money on the electric bill, and was what the community decided to do

The cost itself, to generate power for woodworking and for use in the dairy, was far more than they'd expected, well over $50,000. This had required long hard lobbying --if that is the word-- in the Ordnung by Josiah. By working together --in typical Amish fashion-- the labor costs to set up the arrays were minimal. And before they started, they all realized that the whole community would have to share the cost but would share the power. Neighbors came to use the woodworking equipment, and milk storage tanks had to be tripled in size to accommodate neighboring dairy milk. Still, the system worked, and absent physical damage to the arrays, they should run quietly and as long as the community kept them clean and performed minimal maintenance.

Still, it was an odd looking construction -- black and shiny, definitely high-tech, and didn't exactly blend in with the typical Amish décor.

And then there was the heat. Nobody in the community remembered it ever being this hot, for generations, in the middle of May. Families could tolerate heat inside the barns and homes -- hand fans will always work-- but they were beginning to worry about possible damage to the solar panels themselves. And not only that, but the English were acting strange. The cost of gasoline had risen so high, up to $10/gallon at times, that the Amish didn't get very many gawking tourists anymore, and they didn't worry about vandalism from the English teenagers as much. But there was a certain tension when the English tankers came to pick up the Amish milk, always chilled as it should be, since power outages that the English farmers experienced hadn't ruined any of the Amish milk. Power outages usually occurred during the day when the sun was shining.

Yet the tension was clear. English farms were built on a scale that couldn’t apply solar refrigeration without massive changes to the buildings and land use, the cost would be way beyond English farmer means –especially in the newly depressed economic environment—and the demand for solar equipment in general was so high that just getting the supplies was nearly impossible.

There is generally a natural fellowship between farmers, in good times and in bad, but that friendship was strained as the “oddball Amish” –as some English referred to them—were clearly better positioned for the gathering energy storm. And most farmers have guns. What’s to prevent a stray bullet from hitting some solar panels by mistake? The Amish were no strangers to such outsider violence, and by nature would neither defend against it or repay in kind. But the threat of such violence seemed to be growing, and it was anybody’s guess where it would end up since the economic depression seemed to be worsening with no end in sight.

Peak Oil Hits the Amish

Amish Country, March 2010

I have always had a warm spot in my heart for the Amish. I am a Catholic with strong Franciscan leanings, and one of my favorite images of St. Francis is his rejection of his father's mills and embrace of the humble life. The Amish, without intending so, follow many of the ways of Francis. Here are some short stories about the Amish as they, like the rest of the world, begin to experience the effects of peak oil with ever-increasing world demand for fossil fuels.

I used an excellent article from the IEEE magazine, IEEE Technology and Society, Summer 2007 edition, to learn more about the Amish as background for this post. The article, Amish Technology:Reinforcing Values and Building Community, was written by Jameson Wetmore.

Josiah Glick wondered what the world was coming to. That was a typical question for an Amish farmer. Even though the world energy crisis was affecting Josiah and his Amish community less than it does the outsiders (whom they call the “English”). After all, the technology-skeptic Amish have always moved slowly and consulted their kin before adopting any new technology. Horse buggies insulated the Amish some from the soaring price of gasoline. They decided to accept battery power only with limited use, and bought diesel generators and engines to keep the farm milk cool (or they wouldn’t be able to pass the Pennsylvania state board of health standards). Their circumspect use of modern technologies buffered them somewhat from the vagaries of energy issues in 2010. But only somewhat.

The price of diesel is getting prohibitive for Amish and English alike, making it more costly to produce and deliver milk – especially since Amish farm milk volumes are smaller than those from the large “English” dairies. Sources of both diesel fuel and batteries are also becoming a bit unreliable. Josiah and other members of his extended family were planning to meet soon with the district’s Ordnung council to consider yet another piece of technology that might make them less dependent on diesel supplies: Solar panels or maybe even wind turbines. Adopting solar power would require some unsettling changes, and would be a huge investment, although in some ways the gentle quiet power of the sun is consistent with Amish ways. Wind turbines were similar, a bit more intrusive and definitely noisey, and when Josiah made discrete enquiries, he found that the English orders for wind turbines had been delayed for several years. The suppliers are having to back order their own supplies, partly because European vendors captured suppliers in long-term contracts, and the delays are in years even for large US purchasers.

The energy problem is also affecting his district in ways outside of Amish control. Fencing material deliveries, and other basics, were not arriving when promised. It is very hard to guarantee services to the English when you can’t get the basic materials you need.

Would that diesel and batteries and deliveries and high prices were all Josiah and his community had to cope with. It seems that some English are getting very angry with the scarcities and high prices, whether fuel or foods or virtually anything else. And the English, in Josiah’s view, were a little like a hornet’s nest – best leave it alone and try to work around it. Josiah worried that his district would start experiencing break-ins, shootings, vandalism by the English. After all, the senseless school house shootings several years ago were still fresh in everyone's minds, the Amish equivalent of 9/11.

Still, Josiah and some of his neighbors were convinced that if they were to preserve their peaceful way of life, living off the land and with the sweat of their labor, they would have to do something to preserve their sanctuary and customs.

At the Ordnung, Josiah was surprised how easy it was to get a majority of the elders to agree to a purchase of some sort of energy devices. Thrifty to a fault, they had sufficient funds to purchase whatever Josiah felt would begin to put them on the path of energy independence.

After the meeting, Josiah said to Jacob his son “I know ye aren't done with the rumm-shpringa, running around to taste the English world. But I need your help, and I need it before you choose to return to our Amish world. I have heard from the English that there is this new kind of electric newspaper where you can learn anything ye need to know, and then some. Have ye seen it Jacob?”

Jacob wasn't sure what his father meant, but he guessed: “Do ye mean the Internet, Father?” “I don't know what kind of net it is son, but have ye seen it?” “Yes, Jacob said.” “Well I need ye to find out however you can with this electric newspaper whatever we must do to set up a way to get power from the sun in our community. Can you find that out on the net?”

Jacob replied “I will do my best for ye Father.”

(to be continued)