Energy

The world relies on fossil fuels – oil primarily – to support our lifestyle and economic opportunity. Demand for energy by the rapidly expanding economies of India and China, which include over eight times the population of the U.S. and 1/3 of the world’s total, have strained the global supply and driven up prices – and that will almost certainly continue. Massive amounts of the world’s current oil supply and remaining reserves are either under the umbrella or threat of radical Islam regimes or in the hands of anti-America fanatics like Hugo Chavez in Venezuela.

Over the last few decades with all of the obvious problems, the U.S. has grown increasingly more dependant on these most undependable, unfriendly foreign sources for the energy we rely upon for everything we do, consume, and depend upon. For all of the criticism, make no mistake about it, America’s place as the largest economy in the world, the comfortable lifestyles most of us enjoy, and the freedoms and opportunities we accept to be guaranteed today, can be credited in no small part to the abundant, relatively cheap supply of energy America enjoyed during the rapid expansion of the 20th century. Without the energy that supports us, our economy and lifestyle would come to a screeching halt.

Yet in about 30 years the U.S. dependency on foreign oil has more than doubled. That’s right. In 1972 the U.S. imported about 28% of our oil. Today, most estimates put that number around 60%, with projections that by 2025 we’ll rely on 70% of our oil from outside our shores.

Public policy decisions have certainly contributed to this dramatic turn of events. According to a recent report issued by the Department of Interior on federally owned land alone, the U.S. has enough natural gas to supply every home in America for 39 years, and enough oil reserves to replace current levels of Saudi import volume for 30 years. The problem is federal law and regulation has much of it completely off limits or heavily restricted for production.

Click here to read "Abundant energy supplies off limits"

"Get off oil" is the obvious solution offered by many. This will take place because of market forces (rising costs and dwindling supplies) and because of developing options that become more attractive because of relative cost, environmental, political, and national security reasons. But, it will take a time.

Scientists closely involved with the developing technologies at the National Renewable Energy Laboratory (NREL) in Golden as well as many in the private sector and other research institutions are making good progress in improving the efficiency of solar technology. However, we are still some years away from legitimate marketplace viability of solar power on a large scale. Wind is already playing a role in our energy supply, and Colorado is among the lead states in this effort. Xcel Energy has announced plans to commit more than $400 million to their utilization of wind sourced electricity. With increased transmission capabilities to move wind energy from where it is sourced on our eastern plains to the metro area where it is most needed, wind will provide an increasingly larger portion of our electricity.

Speaking of electrical power, click here to read a fascinating article by Jim Woolsey, former CIA Director and now a renewable energy proponent, about the advancements being made with rechargeable batteries and the application to automobile energy consumption.

Biofuels (ethanol and biodiesel) have gotten great attention of late, and with good reason. Colorado is a significant producer of the main source (corn) currently used to make ethanol. At least one large Colorado plant is currently in production (Sterling Ethanol) and the same group of entrepreneurs has two more plants planned for opening in the very near future in Yuma and across the state line in Nebraska. A smaller plant in Golden processes by-product from the Coors Brewery into ethanol, and other plants are being proposed as well.

Biomass holds considerable promise for renewable energy production. Ethanol can be generated from all kinds of plant materials, and the National Energy Policy Commission estimates that within 20 years the land we now pay farmers to keep vacant and grow nothing could produce crops like switch grass that will provide as much as half of the fuel for our cars. We’ll see.

Thermal Conversion converts virtually anything organic – and that’s just about everything – into oil. No kidding. And, it’s being done already in Missouri on a commercial scale. Proponents say anything from old tires, slaughter house waste, most everything that is dumped into landfills today, is a candidate for Thermal Conversion.

However, among the subsidies for everything from oil and gas to all kinds of renewable fuel sources, Thermal Conversion doesn’t get any Federal Government support. Also, not surprisingly given the kind of raw material we’re talking about here, there is some odor associated with it, and so non-urban location of a plant is critical to mitigate neighbor complaints and trouble from a pesky regulatory agency.

If you want to get a little exited about the potential of Thermal Conversion, as I certainly have, click on the link below to read a great piece about what is already happening to both improve domestic energy production and use otherwise problematic waste products to do it. You'll also read how the U.S. is chasing this technology off-shore through poor public policy.

Click here to read "Anything into Oil"

So, why is all of this so important to Colorado? Well, beyond the very obvious point that we use energy like everybody else, Colorado holds the potential to lead the way in research as well as commercial production capabilities for both traditional as well as renewable energy sources. During my campaign for Governor I said, "I envision Colorado as the nexus of all things energy related in the future. We have the scientists, the entrepreneurial private sector, the resources, and a citizenry that is anxious to lead the way."

I hope that vision and that opportunity comes true. In Colorado we have some of the world’s highest quality coal in abundant supply, and with newly developed clean coal technology including the coal gasification plant that Xcel has announced intentions to build here, that coal should be a part of America’s energy picture.

Energy production from oil shale can once again be realistically discussed thanks to the hundreds of millions invested in research by Shell Oil in northwestern Colorado. While still some years away from large scale commercial production, scientists now believe it is more a question of “when”, rather than “if”, for this source to become viable. The economic and strategic value of this estimated reserve of well over a trillion barrels is hard to fully comprehend.

Colorado also sits atop one of the hemisphere’s richest natural gas reserves. In the last decade alone, annual drilling permits for wells have increased 500%! So, in-state production has definitely soared, but so too has concern for things like air-quality from wellhead emissions, and possible ground water contamination. Tremendous demand for labor has stressed local impacted communities and has also been blamed for a rise in crime such as methamphetamine abuse.

With NREL and now the co-laboratory with the Colorado School of Mines, the University of Colorado, and Colorado State University, in addition to a growing private sector committed to the advancement of renewable energy from all sources, and a population that embraces the utilization of renewables, Colorado really should be the nexus for the future of energy research, development, and commercialization.

I do have a concern though.

Government and politicians from both parties always want to meddle. Some call it incentives, some call it subsidies, and some will call it social engineering. Washington has done its share for sure. And, Colorado has done some, and apparently wants to do some more.

We're hearing lots of talk about increasing mandates for renewable energy. Sounds good, you think? Maybe, depends who’s ox gets gored. Or said another way, scratching the back of special interests is acceptable as long as it's "my special interest."

In my opinion, mandates and subsidies artificially warp the free market. Sure, we need to incentivize research so that we get the scientific work done to lead us into a better future. I’m for that.

But isn’t the objective to reduce or eliminate America’s dependence on foreign sources of energy and provide individuals and business with access to affordable, safe, clean energy at the same time?

When I first visited NREL years ago, Admiral Dick Truly explained that their mission was “to do the initial research and pilot projects and get it to commercial applications as quickly as possible.” It’s hard to argue with that.

What happens though is that other agendas get in the mix. If a powerful politician happens to fancy a certain industry – be that oil and gas, or be that solar and wind – you can bet that he pushes for the benefit of that industry. It makes it far easier to go home and campaign for re-election. You think it is just an accident that one of the biggest proponents of ethanol favoring legislation has been Senator Grassley from the big corn state of Iowa? Or, how many Texans can you name that have been good to oil and gas? As Colorado gets “greener” politicians like Mark Udall’s voice gets louder on Capitol Hill. Governor Ritter and those close to him have intimated new energy mandates both before and since the election.

Now, any or all of these "special interests" may fit with your own special interest, and may even be lucky enough to advance the greater good. But, they do make an otherwise level playing field a lot more uneven.

Here’s the bottom line. Why does the government or any individual politician get to tell us what’s best for us? Why not let competition for dollars motivate the development of the newest, cleanest, most affordable, and sustainable forms of energy?

If you want everyone to wear a pink suit, subsidize them and watch how many get produced and sold. Think we ought to eat more fish instead of beef, then subsidize fish or surtax beef and that’s exactly what you’ll get. The government has long put an artificial floor (subsidy) under many farm products. I learned first hand about it when I was in the dairy business, and it invariably resulted in over production of milk – that the government ended up buying and turning into cheese, butter, and powder to fill up warehouses.

But, if you happen to believe as I do that the free market works exceptionally well to both keep price at an acceptable minimum and incentivize the development of new, better product, then we ought to let it happen. Once opened the Pandora’s Box of Mandate won’t easily be closed, and sooner or later the “little” government mandate you accepted comes back with one like an anvil tied around your neck. Every incentive and every subsidy has a price attached. And, it’s a price that gets paid for by taxpayer dollars.

So, the next time you feel the urge to look to government for a solution, remember this good piece of advice popularized by President Gerald Ford, Barry Goldwater, and originally credited to Davy Crocket:

"A government big enough to give you everything you want, is also big enough take away everything you have."