Does “energy independence” make sense as an energy policy rationale? One of the oft-repeated themes of the presidential campaign was the idea that every U.S. president since Nixon has called for energy independence. Here’s Tufts economist Gilbert Metcalf:

A second broad rationale for government intervention in energy markets is national security concerns. In 2006, the United States imported 66 percent of the 20.6million barrels per day of the petroleum that it consumed Reducing oil imports, it is argued, will reduce our vulnerability
to unstable governments in the Middle East and other oil rich areas. The difficulty with this argument is that oil is a commodity priced on world markets. Even if the United States were to produce all the oil it consumes, it would still be vulnerable to oil price fluctuations. A supply reduction in the Middle East would raise the price of domestic oil just as readily as it raises the price of imported oil.
Even if the United States were able to reduce its consumption of oil to zero, the United States would not be fully insulated from oil price shocks elsewhere in the world. First, an oil price shock that drives up the price of oil for Europe and China would lead those countries to increase consumption of fuels that substitute for oil. Crops used to produce biofuels would be in greater demand in world markets thereby driving up the price of biofuels. Second, a slowdown in the world economy following a price shock would likely have negative spillover effects for the United States.

• “SASOL’s plans to build a new coal-to-liquids plant in Limpopo, with a production capacity of 80000 barrels per day, are continuing.” Business Day
• “Louisiana Energy Services is proposing to double the size of a southeastern New Mexico plant being built to make fuel for commercial nuclear power plants.” AP
• New Mexico rig count down. Me.
• “U.S. crude oil production will increase 8 percent from 2008 to 2009.” EIA
• “Current global trends in energy supply and consumption are patently unsustainable.” IEA

There has been much discussion of the prospect of developing industrial power from the nuclear fission of uranium. This problem is enormously more complicated than the utilization of solar energy. . . . [W]hereas the solar radiations have been made harmless by natural forces, the artificially induced radiation retains all of its virgin malignity. Whereas the generation of solar energy presents no problem for us, the generation of nuclear energy from uranium is beset with dozens of very serious problems.Whereas solar energy is essentially perpetual, the supplies of uranium are definitely limited.

Eugene Ayres, “Power from the Sun,” Scientific American, August 1950, quoted in Frank Laird’s  Constructing the Future: Advocating Energy Technologies in the Cold War, Technology and Culture – Volume 44, Number 1, January 2003, pp. 27-49

From Platts:

Air China has seen its jet fuel hedge slump to almost half a billion
dollars in the red, the Chinese airline warned shareholders in a notice
published on the Hong Kong Stock Exchange after markets closed Friday.
The company, one of the big three national airlines in China, admitted
that it bought and sold oil options at what turned out to be the top of the
market. The company had the misfortune of tying up a substantial position in
oil derivatives in July — when, as it turned out, oil prices hit an historic
peak before collapsing by more than 60% in the next four months.

Found while cleaning off the desk in my office today, a report from back in July prepared by staff for the New Mexico Legislative Finance Committee:

FY09 will be a robust 9.3 percent (growth rate) due to extremely high energy revenues.

Ah, those were the days.

Over at the day job, I’m finished looking at solar tax credits (to be printed on paper and thrown on driveways this weekend) and on to the oil price collapse. The question that interests me is the issue of infrastructure investment. Now that oil is under $50 a barrel, what’s happening to the investment in stuff like holes in the ground and big pipes to carry oil hither and yon? Let us turn to our friends at Bloomberg, who did some of the necessary heavy lifting earlier this week:

The biggest oil companies including Saudi Aramco, Royal Dutch Shell Plc and Petroleo Brasileiro SA are accelerating spending cuts and delaying projects as the world enters a recession, said Morgan Stanley & Co.

As many as 44 projects have been delayed and faced cuts in investments as of Nov. 18, compared with 19 in a Nov. 5 report, analysts Theepan Jothilingam and James Hubbard said in a note today.

Which brings us to the IEA’s recent report which, Richard Kerr summarized nicely in today’s Science (sub. req.):

Although price spikes and drops may recur for years, says economist Fatih Birol, “we think the era of cheap oil is over.” He and colleagues at the Paris-based International Energy Agency (IEA) just released their World Energy Outlook 2008. IEA analysts see enough oil still in the ground to satisfy ever-rising demand for decades to come–assuming the price continues to rise. But they aren’t at all sure that the Middle Eastern government-owned oil companies sitting on most of the remaining oil will be pumping it fast enough a decade or two from now to meet the unbridled demands of the rest of world.