I am way behind on reading books that have been sent to me for review by various publishers. The pile on my desk is growing, because I have a bad habit of starting new books before I finish the one I am reading. Currently I am nearly finished with Oil’s Endless Bid, am halfway through Oil: Money, Politics, and Power in the 21st Century, and had started Amory Lovins’ Reinventing Fire until someone borrowed it from my office.

However, I did manage to recently finish Peter Tertzakian’s A Thousand Barrels a Second : The Coming Oil Break Point and the Challenges Facing an Energy Dependent World. This one had been on my bookshelf for a while (as opposed to the growing stack of books I have been sent to review), but it has been pretty high on my list of books to read. CONTINUE»

In this week’s episode of R-Squared Energy TV, I cover:

• Japan’s decision to abandon nuclear power (which will contend for the top energy story of the year — regardless of how it plays out)
• ConocoPhillips’ successful methane hydrates drilling test in the Arctic, and whether that means that methane hydrates will soon be a viable energy option
• The likelihood that gasoline prices have indeed peaked (for now)

A reader recently called my attention to a new and very interesting presentation from the Department of Energy’s Biomass Program:

Biofuels Design Cases

The presentation explored the question of whether the U.S. government is spending money on the right technology pathways. Costs were presented for biofuel produced from pyrolysis, algae, Fischer-Tropsch (FT), and methanol-to-gasoline (MTG) routes.

I want to share several slides from the presentation to give an idea of what the DOE thinks about the costs for producing biofuels via the various pathways. The first slide below shows the projected cost of production of biofuels via MTG, pyrolysis, and FT for the “Nth Biorefinery Plant” — which is defined as the projected fuel cost after a number of plants have been built and the learning curve has been mastered.

 Figure 1. DOE projections of costs for biofuel from MTG, pyrolysis, and FT routes.

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In this week’s episode of R-Squared Energy TV, I talk about the significance of China’s dominance of rare earth element production, and the conversion of pyrolysis oil into fuel.

The questions answered this week are:

1. Can you discuss the uses of ‘rare earth’ elements in the production of renewable energies (i.e., wind and solar)? Furthermore, can you comment on the supply of rare earth elements? I recently watched this video from Real Clear Energy. Is it accurate that China controls 97% of the current supplies? What implications does this have on growth of hybrid transportation, the wind and the solar industry in the USA?

2. I was watching your reports and was wondering your opinion about the feasibility of pyrolysis. I’ve seen a lot of companies advertising that they have take plastic or tires and produce 80+% and 45% pyrolysis oil respectively. Is that accurate? You also mention upgrading of pyrolysis oil, are there any companies out there who can do it on a commercially viable process? If so could you point me in the right direction?

On May 3rd I will be delivering a talk called Moving Beyond Oil Dependence as a part of UC Santa Barbara’s Spring 2012 Chemical Engineering Seminar Series. The talk will roughly follow the outline of my book, and I have used several graphics from the book in the presentation.

However, I created a couple of graphics specifically for this presentation that I believe explain the majority of the oil price escalation over the past decade. True, part of the price rise may be due to speculation, but the following two graphics show just how robust demand has been even in the face of $100 oil. The data source for both graphics is the 2011 BP Statistical Review of World Energy:

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I am traveling some over the next two weeks, and did not have a chance to record my weekly video segment this week. However, last Friday I was a guest on Alan Colmes’ show on Fox News Radio, so I will share that this week instead. I had been a guest on his show last month to discuss whether President Obama bears responsibility for high gas prices.

As I said then, gas prices are outside the control of a sitting U.S. president. As an aside, gas prices appear to have peaked for now and are on the way down. Does anyone who blamed Obama for higher prices think he is responsible for bringing them back down? That is in fact a dangerous issue to campaign on, because if gasoline prices fall between now and the election — and you have made a big deal out of how they are the President’s responsibility — guess what? President Obama now takes credit for falling gas prices.

Anyway, I am drifting off topic here. On his show, Alan and I discussed my new book Power Plays. Some of the topics we discussed were:

• What peak oil means
• The role of speculators in the oil market
• Why I am skeptical that we will address rising carbon emissions
• Whether methane hydrates are a viable alternative energy source
• The difference between our oil shale resource and oil reserves
• Which alternative fuels are promising

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Survey Says…

If you were to survey people and ask the question “Should we subsidize oil companies?” — the overwhelming majority would undoubtedly respond “No!” The notion that we are subsidizing oil companies generates outrage in many people, but in this article I will show why these subsidies aren’t going to go away any time soon. The reason may surprise you.

I decided to write this article following a a recent discussion in a CleanTech discussion group on the social networking site LinkedIn. The person who started the discussion asked the question “Why is it so Hard to Kill Fossil-Fuel Subsidies?” The discussion was prompted by a recent article by environmental activist and author Bill McKibben called Payola for the Most Profitable Corporations in History. In the article McKibben proposes “five rules of the road that should be applied to the fossil-fuel industry.” But McKibben himself demonstrated in his article that he doesn’t really understand the nature of these subsidies — and this sort of misunderstanding largely explains why so many people are outraged that they persist.

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In this week’s episode of R-Squared Energy TV, I talk about the impact of natural gas in the U.S., and the Canadian economy.

Some of the topics discussed this week are:

• How I think natural gas prices will behave over the next 10 years
• Which industries will benefit the most from low natural gas prices
• The link between hydraulic fracturing (fracking) and earthquakes
• The relative strength of Canada’s economy

Let’s Play ‘Blame the Speculators’

Most people would probably agree that speculation in the oil and gas markets is hurting American consumers. Consider the case of Aubrey McClendon. Mr. McClendon is the CEO of Chesapeake Energy, where he sells natural gas for a living. Natural gas prices have now been pushed down — by speculators — to below $2 per million BTU. This is a drop of more than 80% from 2008 prices. With these depressed prices, Mr. McClendon will have a hard time ever matching his $112 million of earnings in 2008. Mr. McClendon’s livelihood has been hurt by speculators.

Of course Aubrey McClendon is not your average person, and he isn’t likely to garner much sympathy over the decline in natural gas prices — especially since it has benefited consumers. But I use that example to illustrate the point that speculation is not a one-way street where the average consumer always loses. One of the frequently cited causes of high oil prices is from speculation. In fact, I agree that speculation is helping drive up oil prices. However, there are underlying fundamentals at work as well; otherwise the same speculators who are helping drive up oil prices would be doing the same with natural gas prices. Yet those underlying fundamentals are often overlooked in the rush to blame the speculators for spiking oil prices. CONTINUE»

In this week’s episode of R-Squared Energy TV, I talk about the impact I believe $5 gasoline will have on most people, and whether there are any environmentally friendly proppants that can be used for hydraulic fracturing.

Some of the topics discussed this week are:

• My observations here in Hawaii on the impact of $5 gasoline
• Why I think gasoline prices have peaked (for now)
• What proppants are and how they are used in hydraulic fracturing (fracking)