tag:blogger.com,1999:blog-77983541162820310492024-03-08T02:27:31.665-08:00Geopolitics of EnergyDedicated to a Carbonless Electric EconomyHarleyDavehttp://www.blogger.com/profile/13596202686730076462noreply@blogger.comBlogger20125tag:blogger.com,1999:blog-7798354116282031049.post-22415950820322657242010-10-17T12:49:00.000-07:002008-09-11T12:40:48.576-07:00DEADLY FREEDOM - Welcome<p class="western" style="MARGIN-TOP: 0.08in"><span style="color:#333333;">T<img height="188" hspace="13" src="http://docs.google.com/File?id=ddp7qh8p_351f9mx7qhp_b" width="182" align="left" border="0" name="graphics1" />his is the companion site for my new novel </span><span style="color:#0000ff;"><u><a href="http://geopoliticsofenergy.blogspot.com/2007/09/deadly-freedom-is-techno-thriller-based_15.html">DEADLY FREEDOM</a></u></span><span style="color:#333333;">. </span></p><p class="western" style="MARGIN-TOP: 0.08in"><span style="color:#333333;">Imagine a world that has moved to a </span><span style="color:#0000ff;"><u><a href="http://geopoliticsofenergy.blogspot.com/2008/08/dave-spicer-carbonless-electric-economy.html">Carbonless Electric Economy</a></u></span><span style="color:#333333;">, severing its dependence on fossil fuels and reducing the value of imported oil to nearly zero. Then imagine the geopolitical ramifications of that event. How would the oil companies react? How would the OPEC countries react at the loss of trillions of dollars? How would every industrialized nation behave given this new-found freedom? This is the world that Doc Davidson and his team of researchers at USF have triggered and now they have to deal with the consequences. </span></p><p class="western" style="MARGIN-TOP: 0.08in"><span style="color:#333333;">If you’ve read my book and haven’t had a chance to write a review on Amazon.com, I’d appreciate it if you would take a few minutes to do so by </span><span style="color:#0000ff;"><u><a href="http://www.amazon.com/review/product/0978721365/ref=dp_top_cm_cr_acr_txt?%5Fencoding=UTF8&showViewpoints=1">clicking here</a></u></span><span style="color:#333333;"> and hitting the “Create your own review” button. Your feedback will be incorporated in future works. I have now established a </span><span style="color:#0000ff;"><u><a href="http://www.facebook.com/pages/David-Spicer/43603855672">Facebook page</a></u></span><span style="color:#333333;"> for additional communications with the </span><span style="color:#0000ff;"><u><a href="http://geopoliticsofenergy.blogspot.com/2008/08/dave-spicer-message-to-facebook.html"><i>Facebook generation</i></a></u></span> <span style="color:#333333;">in addition to a </span><span style="color:#0000ff;"><u><a href="http://twitter.com/DavidSpicer">Twitter </a></u></span><span style="color:#333333;">account. These are the people who are fighting and dying in our current oil war that is being entirely funded by Chinese debt. It seems appropriate to open a channel of communications with those who will also be saddled with repayment of that debt. The Electric Economy will be able to help fund those payments…</span></p><p class="western" style="MARGIN-TOP: 0.08in"><span style="color:#333333;">The goal of this site is to discuss DEADLY FREEDOM and also discuss what the book is about—getting this country back on track by eliminating our addiction to fossil fuels and <b>turning our energy problem into a national opportunity to become the “Saudi Arabia” of renewable energy technology</b>. This is the place to discuss the characters (what does the future hold for Doc and Sandra?), the plot (could a rogue CIA group like “The Club” really come into being?), and the technology (how quickly could we have the “Electric Economy” in place). By scrolling down to the “comments” section at the end of this article, or clicking </span><span style="color:#0000ff;"><u><a href="https://www.blogger.com/comment.g?blogID=7798354116282031049&postID=2241595082032265724">here</a></u></span><span style="color:#333333;">, you can ask a question or enter a comment. You can still influence the sequel. </span></p><p class="western" style="MARGIN-TOP: 0.08in"><span style="color:#333333;">Political discussion will be unavoidable. When it comes to energy policy, our two candidates tend to rattle off a list of solutions including: hydrogen, biofuels, wind, and solar. The republicans also tend to favor “drill baby drill” with McCain’s recent flip-flop. The problem is that neither understands the ramifications of implementing a multiple-choice solution of incompatible technologies, thinking that lashing together a set of technologies that don’t work individually will somehow work together…hoping for a negative synergy perhaps! I will have some posts on this issue that I hope will generate spirited debate. The first is my “Help Wanted” ad for a president entitled </span><span style="color:#0000ff;"><u><a href="http://geopoliticsofenergy.blogspot.com/2008/01/1292008-help-wanted-president-for-issue.html"><i>Help Wanted: A President for the Issue of Our Time</i></a></u></span><span style="color:#333333;">. My second is an appeal to the person I believe will win the election—which doesn’t mean I’m voting for him—if he is able to avoid any serious missteps: </span><span style="color:#0000ff;"><u><a href="http://geopoliticsofenergy.blogspot.com/2008/08/dave-spicer-senator-obama-real-leaders_04.html"><i>Senator Obama, Real Leaders Have a Strategy</i></a></u></span><span style="color:#333333;">.</span></p><p class="western" style="MARGIN-TOP: 0.08in"><span style="color:#333333;">And now oil billionaire T. Boone Pickens is getting in the act and while </span><span style="color:#0000ff;"><u><a href="http://www.pickensplan.com/index.php">his plan</a></u></span><span style="color:#333333;"> will make him a lot of money, it </span><span style="color:#0000ff;"><u><a href="http://geopoliticsofenergy.blogspot.com/2008/08/dave-spicer-pickens-picks-new-horse.html">won’t help us</a></u></span><span style="color:#333333;"> at all.</span></p><p class="western" style="MARGIN-TOP: 0.08in"><span style="color:#333333;">I’ve had a number of readers tell me the book is prophetic, others have said it’s a sign…</span></p><p class="western" style="MARGIN-TOP: 0.08in"><img height="366" src="http://docs.google.com/File?id=ddp7qh8p_352mhcc39fn_b" width="538" align="bottom" border="0" name="graphics2" /></p><p class="western" style="MARGIN-TOP: 0.08in"><span style="color:#333333;"></span> </p><p class="western" style="MARGIN-TOP: 0.08in"><span style="color:#333333;">Dave Spicer </span></p><br /><p class="western" style="MARGIN-TOP: 0.08in"><i><span style="color:#333333;">V1.11</span></i></p>HarleyDavehttp://www.blogger.com/profile/13596202686730076462noreply@blogger.com4tag:blogger.com,1999:blog-7798354116282031049.post-22842228943819609352010-09-15T07:00:00.000-07:002008-08-25T15:11:40.214-07:00Dave Spicer: An Electric Economy<P class=western id=dxjy style="MARGIN-TOP: 0.08in" align=center><B id=dxjy0>The Facts within the Fiction of DEADLY FREEDOM</B></P> <P class=western id=dxjy1 style="MARGIN-TOP: 0.08in"><BR id=dxjy2><BR id=dxjy3></P> <P class=western id=dxjy4 style="MARGIN-TOP: 0.08in"><FONT id=dxjy5 color=#0000ff><U id=dxjy6><A id=dxjy7 href="http://geopoliticsofenergy.blogspot.com/2007/09/deadly-freedom-is-techno-thriller-based_15.html"><I id=dxjy8>DEADLY FREEDOM</I></A></U></FONT><I id=dxjy9> is a fictional story about a real cause. This is that cause.</I></P> <P class=western id=dxjy10 style="MARGIN-TOP: 0.08in">Do we really want our children and theirs to inherit a world of energy shortages, pollution, global warming, climate change, terrorism and wars purported to defeat terrorism like the current conflict in Iraq? Add to these concerns the fear that Iran is developing a nuclear capability, an impending conflict with China over remaining oil reserves, and the mounting debt our heirs will inherit. The burdens we are placing on future generations beg for leadership and new thinking. </P> <P class=western id=dxjy11 style="MARGIN-TOP: 0.08in">Unfortunately, when we’ve needed statesmen and patriots, we’ve had politicians—in both parties—who have shown themselves to be ineffective leaders, spending billions of dollars and thousands of lives with no perceptible impact on these issues and no discernable strategy for the future.</P> <P class=western id=dxjy12 style="MARGIN-TOP: 0.08in">It’s time to recognize that our expensive, seemingly solutionless fears are not really problems but merely symptoms of the real problem that does have a solution: our continued use of fossil fuels and, more immediately, our dependence on imported oil. The geopolitical well-being of the industrialized world hangs on the irrational whims of a few Middle Eastern countries who by simply pricing their oil in euros instead of dollars could decimate our fossil fuel-based economy.</P> <P class=western id=dxjy13 style="MARGIN-TOP: 0.08in">The debate over global warming is over; the earth is sending a wake-up call. Greenhouse gases, primarily carbon dioxide, have been increasing the amount of heat trapped within our atmosphere. While the number of climatologists in denial has been decreasing, the remaining dissenters are reminiscent of those denying cigarettes were a carcinogen. Such denials in the face of the facts discredit them as well as their science of climatology.</P> <P class=western id=dxjy14 style="MARGIN-TOP: 0.08in">A 6.3 pound gallon of gasoline contains 5.5 pounds of carbon. When each of those carbon atoms combines with two heavier oxygen atoms, that 5.5 pounds of carbon forms 20 pounds of carbon dioxide. If we assume the average car gets 20 miles per gallon, then we are producing one pound of carbon dioxide for every mile driven, an average of 3 trillion pounds per year in the US alone! It doesn’t take a climatologist to understand this cannot be good for our planet. It took billions of years for our planet to sequester fossilized carbon underground. It’s taken just hundreds of years for us to remove it and place it in our atmosphere.</P> <P class=western id=dxjy15 style="MARGIN-TOP: 0.08in">The other pollutants from burning gasoline including nitrogen oxides, carbon monoxide, and particulate matter are visibly obvious to those who live or work in Los Angeles. They are even worse in cities like Sao Paolo Brazil and Mexico City, places where pollution controls are essentially non-existent. The short-sighted view is that countries with pollution need to take care of their own problems. But unlike Las Vegas, when it comes to pollution, what happens in Mexico City does NOT stay in Mexico City!</P> <P class=western id=dxjy16 style="MARGIN-TOP: 0.08in">The world currently consumes oil at the rate of 80 million barrels per day. For those who like numbers, that works out to 1000 barrels per second—clearly not a sustainable level of usage! Not surprisingly, energy shortages and ever-increasing prices for oil and gasoline have become commonplace. We just accept them and anticipate continued increases. </P> <P class=western id=dxjy17 style="MARGIN-TOP: 0.08in">There was a time when OPEC was able to control the price of crude oil, and thus prices at the gas pump, by controlling the output of their oil fields. Tightening the spigots would decrease supply and increase the price; opening them would do the opposite. For the last forty years they have been walking a delicate balance between maximizing their revenues and making sure the price of oil stays just below the level that would encourage development of alternative fuels.</P> <P class=western id=dxjy18 style="MARGIN-TOP: 0.08in">Two things have happened recently to limit their ability to control prices. China and India have been experiencing industrial growth at historic rates, and world oil reserves have reached what a now-famous Shell geologist called “Peak Oil.”</P> <P class=western id=dxjy19 style="MARGIN-TOP: 0.08in">China and India are two of the fastest growing economies, growth that manifests itself in increased demand for energy in the form of oil and gas. It is anticipated by many that China will surpass the United States in GDP within ten to fifteen years. The United States leads the world in oil consumption using 20 million barrels per day, and that number is projected to go to 30 million barrels in ten years. So China, a country that is now using over 6 million barrels per day, can also be expected to be using 30 million in ten years. The near-term ramification of this growth is that OPEC can no longer adjust the price of oil downward. The demands placed by China and India are consuming what was once excess capacity.</P> <P class=western id=dxjy20 style="MARGIN-TOP: 0.08in">The longer term ramifications will be dictated by Peak Oil. In the 1950’s, Shell predicted that US oil production would peak in the 1970’s, and it did. The same forecast showed world oil production peaking in the 2000-2010 timeframe. It appears that this prediction may also have been correct. </P> <P class=western id=dxjy21 style="MARGIN-TOP: 0.08in">The concept behind Peak Oil is that as oil is retrieved from a field, the least expensive barrel to extract occurs when the field is one-half depleted. After that, each barrel of oil will be more expensive to retrieve than the last. The ultimate end of life for an oil field occurs when the energy it takes to retrieve a barrel of oil exceeds the energy in a barrel of oil! In practice, economic limitations will occur before energy limitations. It’s ironic that there will always be a considerable amount of oil in the ground; we just won’t be able to reach it. This means reserve forecasts—as if we could trust them anyway—will need to be adjusted downward to account for “unreachable oil.”</P> <P class=western id=dxjy22 style="MARGIN-TOP: 0.08in">A world experiencing a shrinking supply of a crucial commodity such as oil in the face of increasing demand is vulnerable to war and terrorism.</P> <P class=western id=dxjy23 style="MARGIN-TOP: 0.08in">Since the 1940’s the foreign policies of industrialized nations have been driven by oil. When the United States talks about “protecting its vital interests” in the Middle East, the only vital interest that matters is oil. Oil dictates the behaviors of countries and has been the cause of more than one war. Why did Japan attack Pearl Harbor? Was it because they wanted to vacation in Hawaii? Hardly. During that period, 20 years before OPEC, the majority of the world’s oil came from Texas and Oklahoma. As retribution for Japan’s invasion and occupation of China, we embargoed our oil exports to them. The result was Pearl Harbor. </P> <P class=western id=dxjy24 style="MARGIN-TOP: 0.08in">Today, Iran is developing their nuclear capability. Everyone knows that it will ultimately be used for weapons development yet we are reluctant to take any action, even though we know they are also funding terrorists. Why? Because Iran is a large oil producer and we cannot afford to disrupt our vital interest! And we do not need another Iraq war.</P> <P class=western id=dxjy25 style="MARGIN-TOP: 0.08in">So how is a backward country like Iran able to develop sophisticated nuclear technology? Easy, <FONT id=dxjy26 color=#0000ff><U id=dxjy27><A id=dxjy28 href="http://www.asianresearch.org/articles/2955.html">China is providing</A></U></FONT> it to them in return for oil rights, mortgaging the future of the civilized world for guarantees to the commodity that is their economic lifeblood. As the oil runs out, history will repeat itself and desperation will lead to a conflict between the world’s oldest and newest superpowers.</P> <P class=western id=dxjy29 style="MARGIN-TOP: 0.08in">Terrorism is a very real threat and we do need to defeat it. But if there is one lesson we should learn from the Iraq war it’s that we cannot defeat terrorism militarily. Terrorists do not wear uniforms, do not abide by—or even acknowledge the existence of—the Geneva Convention, and they are willing to kill themselves to kill us. Bullets provide little deterrent to those seeking their own death.</P> <P class=western id=dxjy30 style="MARGIN-TOP: 0.08in">Terrorism is an ideological conflict and the root of the word “ideology” is “idea.” It’s time for a nation of innovators to innovate a better idea that can defeat terrorism without firing a shot. Sixty percent of our oil is imported and sixty-seven percent is used for transportation. Fortunately, one-third of our imports come from Canada and Mexico leaving forty percent from countries that would do us harm. The process of eliminating oil from transportation will drive the value of imported oil to zero, completely eliminating civilized society’s dependence on the Middle East, effectively quarantining them.</P> <P class=western id=dxjy31 style="MARGIN-TOP: 0.08in">Our addiction to oil can be seen for what it really is: the root cause of many of our geopolitical worries. So how can we eliminate this dependence and still keep our economies growing? Clearly, we need to get on a different energy technology curve and many ideas have been advanced; let’s start with false promises and end with one that isn’t.</P> <P class=western id=dxjy32 style="MARGIN-TOP: 0.08in">There have been many handwringing books and articles written on the issues we’ve been discussing. Conservation is often mentioned as the solution. Simply stated, let’s just use less energy to somehow lessen the problems. All we need to do is turn down the thermostat and wear a sweater to bed. Remember Jimmy Carter?</P> <P class=western id=dxjy33 style="MARGIN-TOP: 0.08in">There are two things wrong with this approach, the numbers don’t work, and some of our problems, e.g. terrorism, need complete solutions. Remember, we currently use 20 million barrels of oil per day and if we do nothing, in ten years we will be using 30 million barrels per day. Let’s assume that over the next ten years we find a way to conserve 50 percent of our usage. No one is suggesting this is even possible, but for the sake of argument, suppose we could achieve this lofty goal. That would mean in ten years we would be able to cut our consumption from 30 million barrels to 15 million, just 25 percent less than we use today! The other major consumers would not be able or willing to cut their consumption which means we would not have advanced our position at all. In fact we would weaken it with respect to our influence on oil providers. Conservation may provide some personal satisfaction and may lower your energy bill for a little while, but as a real solution it’s a dead end.</P> <P class=western id=dxjy34 style="MARGIN-TOP: 0.08in">The agriculture industry periodically promotes ethanol as being the way to energy independence, but it, too, has problems. First, we could not possibly distill enough ethanol from corn or other plant material to make a significant difference. Of the 42 gallons of oil in a barrel, the refining process creates 20 gallons of gasoline. Since we are consuming 20 million barrels of oil per day, that says we are consuming 400 million gallons of gasoline per day. </P> <P class=western id=dxjy35 style="MARGIN-TOP: 0.08in">An acre of corn can produce 362 gallons of ethanol per year, or roughly one gallon per day. The energy content of ethanol is just two-thirds that of gasoline, so a car that gets 20 miles on a gallon of gas will require 1.5 gallons of ethanol to travel that same 20 miles. Eliminating oil for transportation would require the production of 600 million gallons of ethanol per day which would require 600 million acres of corn. There are 640 acres in a square mile so this would be just less than a million square miles of corn. The United States has 3.7 million square miles of land area, so to eliminate oil from transportation would require planting more than 25 percent of our country in corn; and this requirement would increase to 40 percent in ten years.</P> <P class=western id=dxjy36 style="MARGIN-TOP: 0.08in">The other problem with ethanol is <FONT id=dxjy37 color=#0000ff><U id=dxjy38><A id=dxjy39 href="http://www.npr.org/templates/story/story.php?storyId=9647424" target=_blank>pollution</A></U></FONT>. The distillation process in volume is highly polluting; and ultimately, burning ethanol as a fuel results in many of the same carbon-based pollutants as burning gasoline. </P> <P class=western id=dxjy40 style="MARGIN-TOP: 0.08in">Despite promotion by the agriculture industry and their strong lobby in Washington, ethanol is another false hope.</P> <P class=western id=dxjy41 style="MARGIN-TOP: 0.08in">When the discussion turns to non-polluting energy alternatives, hydrogen invariably comes up. The oil and automotive industries are spending millions of dollars promoting the Hydrogen Economy; this fact alone should raise eyebrows. </P> <P class=western id=dxjy42 style="MARGIN-TOP: 0.08in">Today, commercial hydrogen is created from natural gas, which tends to lessen its attractiveness, a perverse way to get “renewable energy.” It can also be produced when an electric current is passed through water, a process known as electrolysis. When hydrogen is combined with oxygen in a fuel cell, the result is an electric current and the waste product is the water we started with. A battery is defined as a device that converts chemical energy into electrical energy. In spite of the auto industry’s Fuel Cell Vehicle (FCV) hype, a fuel cell is simply a battery and a Fuel Cell Vehicle is just an electric car powered by a battery.</P> <P class=western id=dxjy43 style="MARGIN-TOP: 0.08in">The problems with hydrogen are with its handling and distribution. The only way to distribute hydrogen in bulk is in its liquid state. Unfortunately, liquid hydrogen is 423 degrees below zero Fahrenheit, or 20 degrees Kelvin, one of the coldest substances on earth. Any attempt to pipe liquid hydrogen through existing oil or gas pipelines would cause them to rupture from the very high pressure and extremely low temperature. Hydrogen suffers from a terrible “chicken or the egg” problem: cars powered by hydrogen will need to wait for hydrogen distribution infrastructure, but that infrastructure is waiting for enough hydrogen powered cars to justify the expense! The oil and automotive proponents of the Hydrogen Economy almost gleefully admit that the infrastructure required is decades away. It’s not surprising that these are the same people who will profit from no change at all.</P> <P class=western id=dxjy44 style="MARGIN-TOP: 0.08in">Perhaps not all the ideas in a Hydrogen Economy are bad. The notion of using batteries and electric motors to power our ground transportation is a good one. Enter the Electric Economy. </P> <P class=western id=dxjy45 style="MARGIN-TOP: 0.08in">The Electric Economy will eliminate carbon from our energy diet and needs three things to solve the problem: clean sources of electricity generation, electric transportation, and a distribution channel to connect them. </P> <P class=western id=dxjy46 style="MARGIN-TOP: 0.08in">Electricity is the cleanest form of energy. It’s universal in that it can be used to run our factories, power our homes, cook our food, and power our transportation. It’s also a “common denominator” since it can be produced from any other form of energy that can create the heat necessary to generate steam to turn a turbine. </P> <P class=western id=dxjy47 style="MARGIN-TOP: 0.08in">The problem with today’s electricity generation is that it comes primarily from the burning of fossil fuels, mostly coal and natural gas. We use some nuclear and we have already tapped most of our hydroelectric generation capability, but there is one untapped renewable source with the capacity to provide all of our peak electricity demand, the sun. </P> <P class=western id=dxjy48 style="MARGIN-TOP: 0.08in">Our country currently uses 4 trillion Kilowatt Hours, or KWH, of electrical energy per year and we can generate all of this energy from the sun. We have two ways of doing this. The first is to convert sunlight to electricity directly using photovoltaic panels like those you see on rooftops in some locations today. The problem with solar energy, even in the desert southwest, is that it only shines eight hours per day. Intermittent energy sources are not a problem as long as you have a way to store energy for use in the evening. Unfortunately, we have no way of storing the many gigawatt hours required for a large-scale grid application.</P> <P class=western id=dxjy49 style="MARGIN-TOP: 0.08in">The other way to generate electricity from the Sun is to do so thermally, using sunlight to heat water that in turn is used to power existing steam turbines. We still have the problem of storing large amounts of energy, but thermally, this is possible using water storage tanks.</P> <P class=western id=dxjy50 style="MARGIN-TOP: 0.08in">It would require 12,000 square miles to provide our current 4-trillion KWH of electricity. If 12,000 square miles sounds like a lot, keep in mind that the state of Arizona has a land area of 115,000 square miles, much of it uninhabitable. So by utilizing just 10 percent of the state of Arizona, we could produce 4 trillion KWH of electricity. And we have much more space than that available to as we can see on this AccuWeather.com map of locations with 80-100 percent sunshine, an area of about 150,000 to 200,000 square miles, a “solar furnace” that can power our country for many generations.</P> <P class=western id=dxjy51 style="MARGIN-TOP: 0.08in"><BR id=dxjy52><BR id=dxjy53></P> <P class=western id=dxjy54 style="MARGIN-TOP: 0.08in" align=center><IMG id=dxjy55 height=453 src="http://docs.google.com/File?id=ddp7qh8p_281g6d7bnc4_b" width=542 align=bottom border=0 name=graphics1></P> <P class=western id=dxjy56 style="MARGIN-TOP: 0.08in"><BR id=dxjy57><BR id=dxjy58></P> <P class=western id=dxjy59 style="MARGIN-TOP: 0.08in">In fact, we have enough solar thermal capacity to completely replace our current nuclear generation capability after we build the infrastructure needed to support our electric LDV fleet.</P> <P class=western id=dxjy60 style="MARGIN-TOP: 0.08in">An Electric Economy mandates a move to electric transportation. In the past, electric vehicles were seen as glorified golf carts, with limited range of less than 100 miles. Today, with recent advances in lithium-based battery technology we can see electric cars like those from <FONT id=dxjy61 color=#0000ff><U id=dxjy62><A id=dxjy63 href="http://www.teslamotors.com/" target=_blank><I id=dxjy64>Tesla Motors</I></A></U></FONT> and <FONT id=dxjy65 color=#0000ff><U id=dxjy66><A id=dxjy67 href="http://www.zapworld.com/electric-vehicles/electric-cars/zap-x" target=_blank><I id=dxjy68>ZAP</I></A></U></FONT> in the US and <FONT id=dxjy69 color=#0000ff><U id=dxjy70><A id=dxjy71 href="http://www.lightningcarcompany.com/" target=_blank><I id=dxjy72>Lightning Car Company</I></A></U></FONT> in the UK that provide all the performance and amenities we expect in cars and with ranges between 200 to 250 miles. And the capacity of lithium battery technology is increasing at 8 percent per year driven by applications such as laptop computers. On average, electric vehicles get 5 miles per KWH which translates into 1 to 2 cents per mile of operating cost. Unlike today’s gasoline motors with hundreds of moving parts that can fail and need servicing, electric motors have just one moving part, the rotor. That means there would be no tune-ups or oil changes required, no emission checks, and no service to exhaust or cooling systems.</P> <P class=western id=dxjy73 style="MARGIN-TOP: 0.08in">So how much additional electricity would we use if all cars and light trucks were electrically powered? About 0.4 trillion KWH or 10 percent more per year than we currently use. </P> <P class=western id=dxjy74 style="MARGIN-TOP: 0.08in">Connecting sources of electricity to the usage of it, including recharging electric vehicles, is the existing electrical grid that already distributes electricity to every home and business in the country.</P> <P class=western id=dxjy75 style="MARGIN-TOP: 0.08in">Fortunately, the Electric Economy does not suffer from “chicken or egg” problems, in fact, the three components are quite independent: We can begin deploying electric cars immediately. These vehicles will typically be charged in the evening, off-peak from the perspective of the current electrical grid. And we can begin building High Voltage Direct Current transmission lines from our “Solar Furnace” in the southwest to each of the eight North American grid regions while we are building the solar collection infrastructure.</P> <P class=western id=dxjy76 style="MARGIN-TOP: 0.08in">What would it take to accomplish the Electric Economy? The work comes in displacing our gasoline powered transportation with electric transportation. To do this we need to mandate that all new cars sold will be electric vehicles, perhaps introduced at the rate of 20 percent per year. With gasoline at $4/gallon, each of these cars would save the owners $2300 per year. These savings would be used to build the solar collection infrastructure in our desert southwest and the distribution from the desert to our existing regional distribution centers. Unlike other alternatives, <B id=dxjy77><U id=dxjy78>the Electric Economy is completely self-funding</U></B>.</P> <P class=western id=dxjy79 style="MARGIN-TOP: 0.08in">Given an Electric Economy, what would our world look like in five years? We would have driven the value of imported oil to essentially zero. The foreign policies of industrialized nations would focus on real economic growth instead of securing oil. We would have no strategic interests in the quarantined OPEC countries other than humanitarian. China would no longer be interested in trading nuclear technology for oil with Iran and we could take the appropriate actions in dealing with Iran’s ambitions.</P> <P class=western id=dxjy80 style="MARGIN-TOP: 0.08in">We would have no gas stations on street corners. Instead we would charge our vehicles in our garages or driveways. As with our cell phones we would always start the day with a full “tank.” Trips over 250 miles would require rapid recharging at stations located along interstate highways, where such distances would be traveled.</P> <P class=western id=dxjy81 style="MARGIN-TOP: 0.08in">There would be no possibility of ecological disaster from oil spills. And we could stop transporting dangerous fuels on the highways and railroads. </P> <P class=western id=dxjy82 style="MARGIN-TOP: 0.08in">Oil is currently the largest component of our trade deficit which would be erased. Instead, we would be exporting our Electric Economy technology to the industrialized world providing a positive trade balance and enormous wealth for this country. This wealth could be used to fund the upgrading of our aging infrastructure and better health, education and lifestyles for our children and theirs. </P> <P class=western id=dxjy83 style="MARGIN-TOP: 0.08in">The Greatest Generation earned that name by their accomplishments and sacrifices for succeeding generations. While ours is not the Greatest Generation, it’s not too late to be great.</P> <DIV id=dxjy84 TYPE="FOOTER"> <P id=dxjy85 style="MARGIN-TOP: 0.46in; MARGIN-BOTTOM: 0in"><I id=dxjy86>V1.12 Page - </I><I id=dxjy87>1</I></P></DIV><BR id=dxjy88>HarleyDavehttp://www.blogger.com/profile/13596202686730076462noreply@blogger.com5tag:blogger.com,1999:blog-7798354116282031049.post-17588840442110491542008-12-25T06:28:00.001-08:002008-12-29T04:50:59.783-08:00The Great Bailout Bank Heist—and a Review of 2008 Frustrations<P class=western style="MARGIN-BOTTOM: 0in">We know it’s happening, we can’t do anything to stop it, and it’s perfectly legal! What is it? The largest bank heist in history. No, don’t worry, the bank’s money is secure, they’re now stealing from us!</P><br /><P class=western style="MARGIN-BOTTOM: 0in">As 2008 winds to a close, it’s time to reflect on this year’s self-inflicted maladies that confound our country. I’ll start with the “Great Bank Heist” and you’ll see how it’s connected to a variety of other concerns, right up to, and including, the real estate collapse and the auto industry bailout; and how the auto problem can actually be turned into an opportunity to reclaim our automotive leadership.</P><br /><P class=western style="MARGIN-BOTTOM: 0in">E<IMG height=133 hspace=13 src="http://docs.google.com/File?id=ddp7qh8p_405g7gf7vfb_b" width=163 align=left border=0 name=graphics1>ver wonder where the $700B Bailout money went? It would be tempting to ask Barney Frank, the head of the House Financial Services Committee. Problem is, he looks like someone who might have trouble balancing his checkbook, much less tracking the whereabouts of our billions! Fortunately, there’s a forensic trail that led us into this crime scene, now it’s a job for <I>CSI Washington</I>!</P><br /><P class=western style="MARGIN-BOTTOM: 0in">The Great Bank Heist plot began in November of 2007 when the SEC decided to institute a new accounting rule known as “Mark to Market” (M2M), formally known as FAS-157 that changed the way banks were allowed to value mortgage-backed securities (MBSs) causing them to spiral downward. These are the same people who allowed Bernard Makoff to “make off” with $50B in a pyramid scheme he ran right under the nose of Chris Cox, the head of this vaunted organization. Fortunately, Mr. Cox will be looking for a new job come January 20<SUP>th</SUP>.</P><br /><P class=western style="MARGIN-BOTTOM: 0in">To solve this problem, Henry Paulson and the treasury pushed through the $700B bailout TARP (Troubled Assets Relief Program) only to find out their <FONT color=#0000ff><U><A href="http://geopoliticsofenergy.blogspot.com/2008/10/solve-it.html"><B>TARP had a large hole in it</B></A></U></FONT>: banks, holding MBSs that were paying 98% of their interest were unwilling to sell them at fire sale prices and be labeled “in trouble,” a scarlet letter that would blacklist them from future loans from other banks.</P><br /><P class=western style="MARGIN-BOTTOM: 0in">So instead of purchasing assets, Mr. Paulson and his treasury decided to buy the banks instead—at least a large percentage of those chosen—by purchasing equity investments, presumably so these banks could begin making loans to individuals, companies, and other banks. At least $350B has been spent this way, but unlike you buying stock in these banks from other stock holders, this was new equity on which new stock would be issued. Normally, when one invests in a company in this fashion, the investor negotiates a “<FONT color=#0000ff><U><A href="http://www.netpreneur.org/funding/FundingArchive/mava2001/Sample_Term_Sheet.html"><B>term sheet</B></A></U></FONT>” detailing the transaction including the amount invested, and the percentage of ownership purchased. Somehow, Mr. Paulson neglected to get (or at least publish) these term sheets; there should be one for each bank.</P><br /><P class=western style="MARGIN-BOTTOM: 0in">So now the banks have <FONT color=#0000ff><U><A href="http://www.cnsnews.com/public/content/article.aspx?RsrcID=41183"><B>heisted $350B of our money without any documentation</B></A></U></FONT> of where it went or how it will be used. And why would they tell us how the money will be used (just because they insist on YOU answering that question when you borrow money from them!) since nothing in the Bailout Bill stipulated they should! But that’s just the beginning; not happy with just $350B, they want ten times that much! </P><br /><P class=western style="MARGIN-BOTTOM: 0in">So what are they doing with the money? Wisely, they are using it to acquire smaller banks not so “gifted” with TARP largess. The reason? It goes back to those pesky MBSs and the Mark-to-Market mistake. Remember, the MBSs held by the banks they are acquiring have been knocked down to 10% of their original value by the new M2M valuation rules. The large banks receiving TARP funds are smart enough to know that ultimately, the dichotomy of MBSs that are paying 98% of their interest (<FONT color=#0000ff><U><A href="http://www.washingtonpost.com/wp-dyn/content/article/2008/03/06/AR2008030601447.html"><B>only 2% of mortgages are in foreclosure</B></A></U></FONT>) yet are valued at 10-cents on the dollar must be rectified. And when this paradox is removed by the SEC in 2009 after their “<FONT color=#0000ff><U><A href="http://news.morningstar.com/newsnet/ViewNews.aspx?article=/DJ/200812081217DOWJONESDJONLINE000416_univ.xml"><B>study</B></A></U></FONT>,” these MBSs will magically be restored to 98% of their original value, resulting in a 10-fold increase in the value of their investments. That’s how they can take the $350B they’ve stolen and turn it into $3.5 TRILLION! Talk about a full Christmas stocking…</P><br /><P class=western style="MARGIN-BOTTOM: 0in">So, as I said in my opening statement: we know what’s going to happen, we can’t stop it, and it’s perfectly legal. And if that’s not ironic enough for you, let me now add that this theft is ultimately in our best interest!</P><br /><P class=western style="MARGIN-BOTTOM: 0in">What did he say????!!!!</P><br /><P class=western style="MARGIN-BOTTOM: 0in">M2M has created a situation where a Fair Value accounting theory intended for <I>liquid</I> assets does not agree with the reality of <I>illiquid</I> MBSs that in the eyes of the holder are worth 98% of their original value. In other disciplines in which I am familiar, e.g., physics and engineering, when theory doesn’t agree with reality, the theory must be changed, reality can’t. But that’s physics, not finance. Ironically, in this case, if we don’t change the M2M theory, reality COULD change since M2M will ultimately bring down all real estate values and thus their mortgages, be they part of an MBS or not. I believe we are seeing the beginnings of this already.</P><br /><P class=western style="MARGIN-BOTTOM: 0in"><B>Auto Bailout</B></P><br /><P class=western style="MARGIN-BOTTOM: 0in">So what does all this have to do with the auto industry bailout? The vast majority of new car purchases are financed through bank loans, or through the lending arms of the automakers themselves (e.g., GM has GMAC). The banks aren’t making loans, and the lending arms, like GMAC, that used to securitize (bundle) their loans into Asset-Backed Securities find few takers given that they are forced to be written down like MBSs. With no one to take on the debt, GMAC is running out of money to loan. No loans, no new car sales. This leads to a fundamental problem that seems to have escaped the auto industry bailout discussion: in recent years, the US market for new vehicles was about 20M units per year. For 2009, estimates are between 10 and 12M vehicles (I actually believe this is optimistic). It doesn’t take an accounting major to understand that if your revenue is cut in half (or more given the desperation sales that are going on), to remain profitable means you need to cut your costs in half—quickly.</P><br /><P class=western style="MARGIN-BOTTOM: 0in">So why did we loan the big three $17B when we know they will burn through that by March of next year and come back looking for more? They have to cut their costs in half, and the only way to do that quickly, while staying afloat, is through a <FONT color=#0000ff><U><A href="http://tinyurl.com/auto-bankruptcy"><B>Chapter 11 reorganization that would allow them to restructure debt</B></A></U></FONT> with their creditors, close excess capacity (GM’s 18 US factories vs Toyota’s 4), shed their onerous legacy benefits and move to non-union labor. Only then should we have invested. We should have insisted on such a plan, but, as demonstrated in our earlier investments in the banks, our leaders(?) seem prone to a ready-fire-aim strategy when it comes to throwing our money around. </P><br /><P class=western style="MARGIN-BOTTOM: 0in">We should look at the US auto industry problem as an <I>opportunity</I> to reinvigorate an aging industry into one that produces the highest technology electric vehicles that would leapfrog the rest of the world, allow our environment to heal itself, and put us in the lead in the race toward building a <FONT color=#0000ff><U><A href="http://geopoliticsofenergy.blogspot.com/2008/08/dave-spicer-carbonless-electric-economy.html"><B>carbonless energy economy</B></A></U></FONT>, one that every industrialized nation in the world will need—and pay for. Unfortunately, with our premature bailout we have just continued to feed the problem—and delay the solution—for another three months.</P><br /><P class=western style="MARGIN-BOTTOM: 0in"><B>Summary</B></P><br /><P class=western style="MARGIN-BOTTOM: 0in">2008 is the culmination of almost six years of self-inflicted disasters that started with our invasion of Iraq for completely unsubstantiated reasons. We then turned the whip on ourselves and in a fit of domestic self-flagellation introduced a misapplied esoteric accounting rule that has had the effect of nearly destroying our economy and those of the industrialized world. M2M is a financial cancer that must be removed. Until that is accomplished, anything else that we do, like purchasing banks or bailing out auto makers, amounts to just “rearranging the deck chairs on the Titanic.” </P><br /><P class=western style="MARGIN-BOTTOM: 0in">We can’t blame the bankers for our real estate/financial crisis, that honor goes to the Mr. Paulson, the SEC and Mr. Cox. However, the bankers have done a great job of taking advantage of the situation for their own advantage at the expense of ours.</P><br /><P class=western style="MARGIN-BOTTOM: 0in">Clearly, assets cannot have two different values at the same time, one dictated by the misapplication of an accounting rule and the other based on the real value of 98% of mortgages that are paying interest. And therein lies a way out of this paradox. Every MBS has an average interest rate and the total principle balance of mortgages within an MBS that are paying interest to the holder(s) can be computed based on the interest received, which becomes the value of the MBS. This would be a good starting point and immediately restore these securities to 98% of their original value and restore sanity to the credit markets. And when we do finally restore sanity to the credit markets, the banks that took $350B of our money will turn that into $3.5 Trillion…and we will all be better off for it! Of course the bankers who took advantage of this irony will be smiling all the way to the…bank. It’s traditional this time of year to talk of New Year’s resolutions, perhaps we need a national one; mine would go something like, “As a great nation, we need to stop making dumb mistakes—and correct those already made.” To quote Pogo, a long-defunct cartoon character, “<FONT color=#0000ff><U><A href="http://geopoliticsofenergy.blogspot.com/2008/09/dave-spicer-bailout-we-have-found-enemy.html"><B>We have met the enemy and he is us</B></A></U></FONT>!”</P><br /><P class=western style="MARGIN-BOTTOM: 0in">If this message is as disturbing to you as it is to me, then I apologize for disturbing you. But if you are disturbed enough, you may want to disturb ten of your closest friends by sending them the link to this message: <B>tinyurl.com/BankHeist-2008</B>, which could ultimately disturb enough people in Washington—or soon to be in Washington—to do something about it; in which case I can stop writing these. Until then, when you see these things happening, remember that “Dave-Told-You-So.”</P><br /><P class=western style="MARGIN-BOTTOM: 0in">Happy(er) New Year,</P><br /><P class=western style="MARGIN-BOTTOM: 0in">Dave Spicer</P><br /><P class=western style="MARGIN-BOTTOM: 0in"><I>V1.3</I></P><br /><P class=western style="MARGIN-BOTTOM: 0in"><BR></P><BR>HarleyDavehttp://www.blogger.com/profile/13596202686730076462noreply@blogger.com0tag:blogger.com,1999:blog-7798354116282031049.post-41631416512844672622008-10-18T03:38:00.001-07:002008-10-22T12:06:42.194-07:00Solve It: We Don't Need a Bailout...And Never Did!<p class="western" style="MARGIN-TOP: 0.08in"><b>All we need to do is roll back the FAS 157 “Mark to Market” valuation rule from November 2007!</b></p><p class="western" style="MARGIN-TOP: 0.08in">The last presidential debate between Obama and McCain left me with the feeling that neither of these candidates is very presidential! We have a financial crisis in full bloom. The stock market will continue to slide until the credit crisis is resolved…today’s businesses need credit to function and the market is recognizing that fact. Yet neither of our candidates has presented any creative ideas for solution. Neither even mentioned our most pressing issue in their lackluster performances.</p><p class="western" style="MARGIN-TOP: 0.08in">Perhaps it’s time for citizens to begin offering solutions.</p><p class="western" style="MARGIN-TOP: 0.08in">Ever wonder how Paulson came up with $700B and if that’s enough (it’s not if we stay on the current track)? Ever wonder why the bailout bill that was passed said that the money would be used to purchase mortgage-backed security assets from the banks…and why that hasn’t been done? Ever wonder why the $700B is instead being used to purchase equity in just nine banks…and if we are now the the majority stockholders of those nine banks are they really just one <i>new</i> bank…and why would this new bank make loans to banks that didn’t get an equity injection? And how does either buying the assets of, or investing in banks address the issue of the damaged banking assets (they don’t)?</p><p class="western" style="MARGIN-TOP: 0.08in">I too began wondering and decided to do some research. The results are in the following four video segments I posted on YouTube that cover: 1) A way to think about and model the behavior of banks that can be used to evaluate “rescue” scenarios; and then using that model, 2) How we got into this mess, 3) The $700B bailout option(s) and why they won’t work, and 4) A rescue scenario that I call “Back to the Future” that rolls back “mark to market” asset valuation that can solve the financial crisis without spending a dime!</p><p class="western" style="MARGIN-TOP: 0.08in">These videos are in their first unedited release. I targeted a few individuals in advance and have received some feedback; I would appreciate yours. When I have enough new material I will re-release the set. Please leave comments in the section below the last video or contact me directly at: <a href="mailto:GeopoliticsOfEnergy@gmail.com">GeopoliticsOfEnergy@gmail.com</a>. If you want to reference this article in emails, you can do so with this link: <span style="color:#0000ff;"><u><a href="http://tinyurl.com/solve-it">tinyurl.com/solve-it</a></u></span></p><p class="western" style="MARGIN-TOP: 0.08in"><b>Banking System Flow Model:</b><br /><object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/EzyYJlbbmio&hl=en&fs=1"></param><param name="allowFullScreen" value="true"></param><embed src="http://www.youtube.com/v/EzyYJlbbmio&hl=en&fs=1" type="application/x-shockwave-flash" allowfullscreen="true" width="425" height="344"></embed></object><br /></p><p class="western" style="MARGIN-TOP: 0.08in"></p><p class="western" style="MARGIN-TOP: 0.08in"><b>How we got into this mess:</b><br /><object height="344" width="425"><param name="movie" value="http://www.youtube.com/v/R_N2fSpgpxs&hl=en&fs=1"><param name="allowFullScreen" value="true"><embed src="http://www.youtube.com/v/R_N2fSpgpxs&hl=en&fs=1" type="application/x-shockwave-flash" allowfullscreen="true" width="425" height="344"></embed></object><br /></p><br /><p class="western" style="MARGIN-TOP: 0.08in"><br /><b>The $700B Bailout Scheme(s)…and why they won’t work:</b><br /><object height="344" width="425"><param name="movie" value="http://www.youtube.com/v/SBMu3Ns70i8&hl=en&fs=1"><param name="allowFullScreen" value="true"><embed src="http://www.youtube.com/v/SBMu3Ns70i8&hl=en&fs=1" type="application/x-shockwave-flash" allowfullscreen="true" width="425" height="344"></embed></object><br /></p><br /><p class="western" style="MARGIN-TOP: 0.08in"><br />“<b>Back to the Future,” Unwinding the Mark-to-Market Mistake:</b><br /><object height="344" width="425"><param name="movie" value="http://www.youtube.com/v/uM-WUctKFAc&hl=en&fs=1"><param name="allowFullScreen" value="true"><embed src="http://www.youtube.com/v/uM-WUctKFAc&hl=en&fs=1" type="application/x-shockwave-flash" allowfullscreen="true" width="425" height="344"></embed></object><br /></p><br /><p class="western" style="MARGIN-TOP: 0.08in"><br /><em>V1.1<br /></em></p>HarleyDavehttp://www.blogger.com/profile/13596202686730076462noreply@blogger.com2tag:blogger.com,1999:blog-7798354116282031049.post-80457051699409777632008-10-07T13:16:00.000-07:002008-10-09T18:35:07.035-07:00Dave Spicer: Bailout: Shame on (the) US, Let’s Get Back to Work<p class="western" style="MARGIN-TOP: 0.08in">As you know, the first bailout proposal was rejected by Congress by 12 votes. The bill then went to the Senate where they attached $150 Billion in “sweeteners” which they then passed and sent to the House. This time the House also passed the bill (<span style="color:#0000ff;"><u><a href="http://geopoliticsofenergy.googlegroups.com/web/Senate+Bailout.pdf?gda=yotFlUQAAABexNbu8F7Cf08a6iMoU-3QZL4B6sFhduYoTYqSzGnTyvFAb2wKElKMwj-0IH5eStlV6u9SiETdg0Q2ffAyHU-dzc4BZkLnSFWX59nr5BxGqA">here’s the entire document</a></u></span>) with flying colors. So what kind of “entitlements” were added to the bill? Here’s the <span style="color:#0000ff;"><u><a href="http://sayanythingblog.com/entry/earmarking_while_rome_burns_more_on_the_porked_up_bail_out_bill/">complete list</a></u></span>. </p><p class="western" style="MARGIN-TOP: 0.08in">I defy anyone to tell me what the excise tax exemption for <i>“Wooden Arrows Designed for Children”</i> has to do with solving our credit crisis. Not even the writers for David Letterman or Jay Leno could have made this stuff up! The tragedy, of course, is that we have a real problem to solve while our “leaders” in Washington play games with legislation. And our credit “virus” has proven contagious, jumping across the Atlantic where it’s <span style="color:#0000ff;"><u><a href="http://www.iht.com/articles/2007/08/09/business/subprime.php">impacting European banks</a></u></span>. Since the bill’s passage, the stock market has become less than impressed when investors realized the effects of the introduction of $700B into the market would take longer than they would like. Paulson indicated he needed several weeks to develop a plan for deploying the money. Apparently, spending $700B is a big job…where do I sign up to help?</p><p class="western" style="MARGIN-TOP: 0.08in"><b>The Shame</b></p><p class="western" style="MARGIN-TOP: 0.08in">The portion of the bill having to do with the credit problem is essentially unchanged, which tells you Congress was more interested in their entitlement programs than solving the real problem. And here’s the irony, we really didn’t need the bailout bill at all…</p><p class="western" style="MARGIN-TOP: 0.08in">Our fractional reserve banking system has worked well for decades. When a large and complex system such as this breaks down, it’s useful to look back to see what, if anything, has changed. In the case of our current banking crisis, what changed most recently was the introduction of a new set of accounting rules regarding mark-to-market asset valuation, formally known as FAS 157, in November of 2007. <span style="color:#0000ff;"><u><a href="http://geopoliticsofenergy.blogspot.com/2008/09/dave-spicer-economic-tailspin-disaster.html">See my previous</a></u></span> post for more depth on FAS 157.</p><p class="western" style="MARGIN-TOP: 0.08in">The story of FAS 157 begins with the Enron disaster in an attempt to correct specious asset valuations that hid the problems within a company that truly demonstrated capitalism run amok. Enron was playing fast and loose with the valuation rules in effect at the time, and FAS 157 was the SEC and FASB’s answer. Arming the SEC with a stronger FAS 157 rule was like giving them a hammer, and once they had a hammer everything started to look like a nail…including mortgage-backed securities. The result decoupled the valuation of these thinly-traded securities from their component mortgages and collateral properties. The estimates I’ve seen say banks have had paper losses of $500B in assets due to this uncoupling which translates into $5 Trillion lost in lending capacity! Many of these securities had to be written down to zero in the collapsing market for them following the rules of FAS 157. <i>But wait a minute, the intrinsic value of the mortgage balances and collateral property contained in these securities certainly hasn’t gone to zero! </i></p><p class="western" style="MARGIN-TOP: 0.08in">Contrary to what you’ve probably heard about needing more regulation, ironically, FAS 157 represented the application of too much regulation. If we want to free up our credit system and re-energize the stock market we just need to take the following steps:</p><p class="western" style="MARGIN-TOP: 0.08in"><b>1. Rollback the asset valuation rules</b> for mortgage-backed securities, FAS 157, to those that existed before Nov 2007. This will allow these securities to regain their lost value on balance sheets and immediately free banks to begin lending again. No central plan or infrastructure to deploy billions of dollars will be needed, just a rule from the SEC. This step will free up credit “instantly” and won’t cost us a dime.</p><p class="western" style="MARGIN-TOP: 0.08in"><b>2. Establish “Mark-to-Reality” valuation rules.</b> In deference to the SEC, the asset valuation rules prior to Nov 2007 were not as accurate as they should have been, in many cases allowing assets to be valued based on their purchase price…which would not be accurate during the life of these securities. But instead of playing “Whack-a-Mole” with FAS 157, all we need are “Mark-to-Reality” rules that would require banks holding mortgage-backed securities to mark each individual mortgage and property to current assessed valuation and do this on a periodic basis, say quarterly. While this would be a lot of work, if you had an asset like a mortgage-backed security worth $100M, don’t you think it would be worth the effort to protect that asset?</p><p class="western" style="MARGIN-TOP: 0.08in"><b>3. Changes going forward.</b> We can’t undo the mortgage securities that currently exist. We can, however, establish more conservative guidelines for new mortgages that require “old-fashioned” rules like…having a down payment!</p><p class="western" style="MARGIN-TOP: 0.08in"><b>Summary</b></p><p class="western" style="MARGIN-TOP: 0.08in">By analogy, our situation is like you waking up one morning, turning on your PC and discovering it doesn’t start up. You have some important work to do so you call in expensive consultants and they proceed to dismantle your machine looking for the problem. It’s then that you discover the machine wasn’t plugged in…</p><p class="western" style="MARGIN-TOP: 0.08in">The SEC didn’t need an act of Congress to get us into this problem; we don’t need one to get out of it. It’s time to realize we can free up the credit markets in relatively short order so we can focus on our energy issue that is costing us $700B <b><i>every year</i></b> by eliminating our dependence on foreign oil through a <span style="color:#0000ff;"><u><a href="http://geopoliticsofenergy.blogspot.com/2008/08/dave-spicer-carbonless-electric-economy.html">Carbonless Electric Economy</a></u></span>. If you agree, you might want to do what I did and write to your representatives in Washington telling them to <b>rollback FAS 157 for mortgage-backed securities</b>, it’s just that simple. Using <span style="color:#0000ff;"><u><a href="http://www.visi.com/juan/congress/">this website</a></u></span>, you can enter your address and obtain the contact information for your representatives, including their email addresses. If you want to reference this article, simply copy this link into your message: <b>http://tinyurl.com/rollback-fas157</b></p><br /><p class="western" style="MARGIN-TOP: 0.08in"><i>V1.4</i></p>HarleyDavehttp://www.blogger.com/profile/13596202686730076462noreply@blogger.com0tag:blogger.com,1999:blog-7798354116282031049.post-43271046183574981602008-09-29T07:29:00.000-07:002008-10-01T10:00:20.910-07:00Dave Spicer: Economic Tailspin: The Disaster Aboard FAS 157<p class="western" style="MARGIN-TOP: 0.08in">No, FAS 157 is not an airline flight number in a disaster movie, it’s something much worse when it comes to the disaster that has become our economy; FAS 157 is an Accounting Rule we’re riding straight into the ground—an Accounting Rule! </p><p class="western" style="MARGIN-TOP: 0.08in">FAS 157 is the “mark-to-market” accounting rule created by the <i>Financial Accounting Standards Board </i>(<span style="color:#0000ff;"><u><a href="http://www.fasb.org/">FASB</a></u></span>) that I spoke of in <span style="color:#0000ff;"><u><a href="http://geopoliticsofenergy.blogspot.com/2008/09/dave-spicer-bailout-we-have-found-enemy.html">my original post</a></u></span> that decoupled mortgage-backed securities from their underlying real estate assets back in November 2007 and simply stated, FAS 157 <u>must be repealed or we will experience a rerun of this credit disaster movie</u>. Can it really be that simple? Read on…</p><p class="western" style="MARGIN-TOP: 0.08in">The 110-page congressional “Rescue Bill” is <span style="color:#0000ff;"><u><a href="http://i.cdn.turner.com/cnn/2008/images/09/28/ayo08c04_xml.pdf">now available online</a></u></span> for your reading enjoyment. It’s the result of a week’s worth of Washington legislative shenanigans that served as the best advertisement for congressional term limits I’ve seen. These are the people we’ve put in charge of our country! Makes me want to vote this election season for the people with the <u>least</u> amount of time in Washington…how about an Obama/Palin ticket!</p><p class="western" style="MARGIN-TOP: 0.08in"><b>An Example: SampleBank</b></p><p class="western" style="MARGIN-TOP: 0.08in">To understand the mark-to-market issue we need to climb into our time machine and travel back to pre November 2007 and the value of a mortgage when a bank sells it to another bank. The value of that mortgage is simply the unpaid principle along with the risk that the homeowner will default (in which case the value is that of the underlying property) or that the homeowner will prepay and thus lessen the interest part of the return. To keep the example simple, let’s assume neither of those occurs because both are a rarity.</p><p class="western" style="MARGIN-TOP: 0.08in">Enter mortgage-backed securities (MBS), which are bundles of mortgages, and in some cases thousands of them. And for the sake of this example, let’s have an MBS bundle of 1,000 mortgages with an average principle balance of $100,000 which means the value of our MBS is $100M dollars. </p><p class="western" style="MARGIN-TOP: 0.08in">Now let’s assume that SampleBank buys this MBS with the intent to hold it until maturity. This is the bank’s capital and if we assume they have the leverage to loan out 10 times their capital, this means they can make loans up to $1B based on this asset. They also begin to process the individual loans in the bundle, sending out coupon books, receiving monthly payments, and producing statements.</p><p class="western" style="MARGIN-TOP: 0.08in">Along comes November 2007 and the requirements of FAS 157, mark-to-market valuation of mortgage-backed securities. FAS 157 says SampleBank must no longer value its MBS based on the unpaid principle, but instead must value it at the price of other MBSs that have been recently traded! Well, mortgage-backed securities are not the most liquid of securities given the infrastructure needed to process them. This concerns the president of SampleBank who decides he now has additional uncertainty as to the value of his MBS and thus the credit leverage it provides, so he decides to sell it. Over time, so do a lot of other banks, which drives the value of the MBS down, and thanks to FAS 157, when the price goes down, so do the values of every other MBS even though the intrinsic value of the underlying unpaid principles and backing real estate have not actually decreased. The result is panic selling and complete uncertainty of the value of a bank’s MBS portfolio and thus the amount of money they can lend…so they stop lending! An <span style="color:#0000ff;"><u><a href="http://money.cnn.com/2008/09/30/news/economy/plan_b/index.htm?postversion=2008100105">estimate from William Isaac</a></u></span>, former chairman of the FDIC, is that since FAS 157 was enacted, banks have had to artificially write down $500B in assets which means <u>they have lost $5 Trillion in lending capacity</u>.</p><p class="western" style="MARGIN-TOP: 0.08in">In contrast to what the talking-heads on your television say, this is not just a problem for homeowners… it’s a problem for anyone who directly or indirectly depends on credit which includes homeowners, renters, children living with parents, every man, woman and child in the country. It certainly does decrease the availability of new mortgages and thus the number of potential buyers of real estate which lowers the price of that real estate, but it also impedes the purchase of everything else.</p><p class="western" style="MARGIN-TOP: 0.08in"><b>Repealing FAS 157</b></p><p class="western" style="MARGIN-TOP: 0.08in">So what would happen if we simply repealed FAS 157? The value of SampleBank’s MBS would resort to it’s pre November 2007 value. The winner would be the bank that bought it at an artificially distressed price and the loser would be SampleBank that sold it at that price. Banks that held their portfolios—in some cases because they couldn’t sell them—would have their portfolios restored, and in all cases, capital would magically return freeing up ten times that amount of credit. This means that if we (the government) start purchasing these distressed MBS portfolios according to the “Rescue Bill” and THEN repeal FAS 157 we would have a windfall profit when we put them back on the market.</p><p class="western" style="MARGIN-TOP: 0.08in">If you read the HR Rescue Bill in it’s entirety (have an ample amount of No-Doz handy) you will find buried in Section 132 “The Authority” to suspend FAS 157, and in Section 133 the initiation of a “Study on mark-to-market accounting” which implies they are considering the issues just discussed. They need to do more than “study” and consider, they need to act! It’s interesting that we don’t really need a bill of any kind to solve the credit problem since FASB didn’t need one to cause it. They can repeal FAS 157 as easily as they created it.</p><p class="western" style="MARGIN-TOP: 0.08in">This credit meltdown was triggered by the stroke of a pen, the penning of FAS 157. It can be rectified by another stroke of the pen that repeals this absurd rule as applied to mortgage-backed securities. This is Henry Paulson’s task and he just needs to overcome the major proponents of FAS 157 who architected this disaster, the largest being, ready for this… <span style="color:#0000ff;"><u><a href="http://dealbook.blogs.nytimes.com/2008/07/22/paulson-weighs-in-on-mark-to-market-debate/">Henry Paulson himself</a></u></span>! Talk about a movie plot!<br /></p><p class="western" style="MARGIN-TOP: 0.08in"><i>V 1.3</i></p>HarleyDavehttp://www.blogger.com/profile/13596202686730076462noreply@blogger.com4tag:blogger.com,1999:blog-7798354116282031049.post-70245958198399420432008-09-25T13:50:00.000-07:002008-09-26T13:31:30.569-07:00Dave Spicer: The Bailout: We Have Met the Enemy and He is Us<p class="western" style="margin-top: 0.08in;">“<b>What country poses the greatest threat to the United States?”</b></p>I<img src="http://docs.google.com/File?id=ddp7qh8p_371c32h7hhj_b" name="graphics1" width="388" align="left" border="0" height="219" hspace="13" /> heard this question being asked of several politicians on some of last Sunday’s morning talk shows. In each case, the politician would pause for a few minutes of thoughtful deliberation and then respond with either “Iran,” “Iraq,” or “Pakistan” and elaborating on their concern. It seems to me they’ve missed the point. Given our perennial lack of leadership when it comes to the issues we face, and with the addition of our recent “mortgage meltdown,” we may be our own biggest threat. It’s sad when the “smartest person in the room” is Pogo, a retired cartoon character who said, “We have met the enemy and he is us.”<br /><p class="western" style="margin-top: 0.08in;">With regard to the mortgage crisis I believe, as with other issues we face, we have been poorly informed as to its causes and even less well informed regarding the <span style="color:#0000ff;"><u><a href="http://blogs.wsj.com/economics/2008/09/20/treasurys-financial-bailout-proposal-to-congress/">proposed $700B “bailout.</a></u></span>” I recommend everyone read Paulson’s short document to establish a grounding in his proposal.</p>It’s clear that our politicians never took a Marketing 101 course since their first problem is calling what’s being discussed, a “bailout.” That word is never mentioned in Paulson’s document and has strong negative connotations. The real objective is to restart the credit markets through investments in mortgage-backed securities. <u>In addition to a turnaround, if properly handled, these investments will provide considerable profit for our treasury</u>. Instead of calling it a bailout, we should be calling it a “restart” for our economy. What they also should have said is that $700B is the <u>cap</u> on the investment. If handled correctly, it could turn out to require a much smaller number as I’ll discuss below. The only people who will not benefit are those who do not depend on credit and do not depend on companies that do depend on credit. I know of no one in that situation.<br /><p class="western" style="margin-top: 0.08in;">Let’s understand what’s required:</p><ol><li>We need to make funds available for new credit, be it commercial loans or new mortgages to keep the wheels of our economy turning.<br /></li><li>We need to make sure the situation that caused this disruption is never allowed to occur again.</li></ol>Our financial infrastructure is broken not because people borrow money to buy homes, but because of the way in which their loans were packaged and securitized. Loan originators lured people who should have known better into taking loans they couldn’t afford. These companies took the origination fees (points) and promptly sold bundles—up to thousands of these loans—called Mortgage-Backed Securities (MBSs) to banks, thus passing the risk to them. The banks, unsure of the quality of these securities, bought insurance from companies like AIG, thus passing the risk to them. When the music stopped, AIG didn’t have a chair. Banks can only lend up to a multiple of their capital. Because of the freefall in the value of their mortgage assets they now find themselves in the position of not having enough capital to cover the loans they’ve made, not to mention new loans they need to make—be they mortgages or just regular commercial loans—to keep the economy going.<br /><p class="western" style="margin-top: 0.08in;"><b>No market means no value</b></p>According to SEC accounting rules, mortgage-backed securities are valued on a <span style="color:#0000ff;"><u><a href="http://blogs.wsj.com/deals/2008/09/22/why-has-the-credit-crunch-been-so-bad-look-to-washington/?mod=googlenews_wsj">mark-to-market basis</a></u></span> meaning that the value of these instruments is based on their <u>trading</u> value, a change the SEC instituted in November 2007. When the world became suspicious of some of these mortgages, MBS mark-to-market value fell, causing the value of these securities to fall even further, until we are at the point where there is no market thus there is no value.<br /><p class="western" style="margin-top: 0.08in;">Here’s the irony. The ultimate value of an MBS is the intrinsic value of the real estate covered by its component loans and 80% of those loans are solid. However, by valuing on a mark-to-market basis, instead of on, say, an assessed valuation basis, the <u>market price</u> of these valuable assets has been driven to zero.</p><b>Pushing the “reset” button</b><br /><p class="western" style="margin-top: 0.08in;">What’s needed to restart the credit markets is a “market maker” who will step up and take a long position in these securities, and that long position can be something conservative, say 10 cents on the dollar relative to assessed valuation. Once traders know that there is someone willing to buy, that will restart trading. Over time, these securities will begin to move toward their intrinsic value, say 80 cents on the dollar and along the way, the market maker can sell at a profit. So who should be the market maker? It needs to be someone with deep pockets and staying power…and the only candidate with those credentials is the US government. This is the crux of the use of the $700B that is proposed to be allocated. We may never require that entire sum be invested before traders feel confident that the market is back in operation, but the market needs to know we can “go deep.” And again, we stand to make a considerable profit in the process.</p><b>Making sure it doesn’t happen again</b><br /><p class="western" style="margin-top: 0.08in;">An important piece missing from the Paulson proposal, and something we should insist on, is a plan to ensure that essential credit transactions like mortgages do not cause a repeat of this debacle. Remember, we got into this mess by writing shoddy mortgages and allowing the people holding them to sell them off at a profit while passing the risk to someone else. For existing mortgages it may mean reverting to a more stable set of accounting rules, moving away from mark-to-market. For new mortgages we may need to establish a new set of rules: these mortgages CAN NOT BE SOLD, the originator must process them and live with them which will encourage originators to scrutinize borrowers more carefully and get back to reasonable terms including greater-than-zero down payments. This means the under-capitalized fly-by-night originators “The greatest deal since the history of earth...” will go out of business and borrowers will get loans from banks that will process them to maturity, just as we used to.</p><b>Summary</b><br /><p class="western" style="margin-top: 0.08in;">Basically, we need to become the MBS market maker by purchasing some of these securities at a low price to kick-start trading. This will provide capital for new credit, both commercial and mortgage, with mortgage loans under a new (actually old) set of rules that will ensure we don’t revisit this situation again. The credit markets are in cardiac arrest. Picture Paulson and Bernanke each holding one paddle of a financial defibrillator to the chest of our economy and yelling, “Clear!”</p>It’s time to get this done so we can get our country back to work solving the real issue of our time, our continued dependence on imported oil. If we think a one-time expenditure of up to $700B is upsetting, we should keep in mind that that is the same amount we spend <u>annually</u> on imported oil. <span style="color:#0000ff;"><u><a href="http://geopoliticsofenergy.blogspot.com/2008/08/dave-spicer-carbonless-electric-economy.html">Imagine what we could do</a></u></span> if that capital was retained in our economy!<br /><p class="western" style="margin-top: 0.08in;"><b>Addendum – 9/26/2008</b></p>Since my original posting of this article I’ve had a great deal of supportive feedback asking that I add to the discussion the following issues:<br /><p class="western" style="margin-top: 0.08in;"><b>Executive Compensation</b></p>Much of the discussion by the team of politicians negotiating the “restart” plan are concerned with executive compensation for companies that have failed their customers and investors. This is a red herring. While I agree that underperforming CEOs should not be rewarded, relative to the many trillions of dollars at stake, a fee million is a nit. That problem can be deferred until after we get the patient stabilized. It’s like having a cardiac patient on the gurney and debating if we should trim his fingernails before applying the paddles!<br /><p class="western" style="margin-top: 0.08in;"><b>Purchasing securities above market value</b></p>I have seen comments concerned that the government will begin purchasing these securities at above-market prices. When the current value of these securities is zero, it will be difficult NOT to begin purchasing above that price!<br /><p class="western" style="margin-top: 0.08in;"><b>Nationalization</b></p>Some reports are claiming that the Paulson plan amounts to nationalization of the companies in trouble. Anyone who reads the document will understand that nowhere does it state we will be taking an equity interest in these companies. What’s being proposed is an investment opportunity for taxpayers—us—that will restart the credit markets and if properly executed, a nice profit for our country.<br /><p class="western" style="margin-top: 0.08in;"><i>V 1.5</i></p>HarleyDavehttp://www.blogger.com/profile/13596202686730076462noreply@blogger.com0tag:blogger.com,1999:blog-7798354116282031049.post-70400686438493346112008-09-18T09:43:00.000-07:002008-09-20T06:50:15.080-07:00Dave Spicer: AIG Not a Result of Mortgage Meltdown, It Was a Cause!<p class="western" style="MARGIN-TOP: 0.08in">What does AIG, an insurance company, have to do with the mortgage meltdown?</p><p class="western" style="MARGIN-TOP: 0.08in">Why did we bail out AIG and not Lehman Brothers?</p><p class="western" style="MARGIN-TOP: 0.08in">How do we avoid a mortgage-meltdown repeat in the future?</p><p class="western" style="MARGIN-TOP: 0.08in">These are just some of the questions being asked and what I think you’ll be surprise to learn is that <b><u>AIG was not a result of the mortgage meltdown, it was a cause</u></b>.</p><p class="western" style="MARGIN-TOP: 0.08in">Banks have been writing risky mortgages for a long time, at least since Bill Clinton <span style="color:#0000ff;"><u><a href="http://www.ibdeditorials.com/IBDArticles.aspx?id=306370789279709">promoted the idea</a></u></span> of loosening credit requirements to make home ownership available to more Americans. On the surface, it may have sounded like a good idea, but like an iceberg, the dangers lie beneath the surface.</p><p class="western" style="MARGIN-TOP: 0.08in">Once the rules for lending softened, the creative juices of mortgage lenders began to flow resulting in subprime loans, teaser rates, and what some of them called “ninja” loans (<u>N</u>o <u>I</u>ncome, <u>N</u>o <u>J</u>ob, no <u>A</u>ssets). Clearly, these were risky loans, and where there’s risk, there’s a desire for risk-avoidance.</p><p class="western" style="MARGIN-TOP: 0.08in">Enter the Credit Default Swap or “CDS.” The media likes to call these “exotic derivatives” and tries to put the blame there. A CDS is nothing more than an insurance policy purchased by a creditor who agrees to pay a periodic premium for the right to collect on the policy if their customer defaults on the loan. So who would write such insurance policies? Insurance companies, of course, and the largest insurance company, AIG, would write the most.</p><p class="western" style="MARGIN-TOP: 0.08in">Is there anything wrong with writing a CDS? Only if there’s something wrong with writing an insurance policy on your house or car. However, there is one significant difference between the two. When it comes to your home, since you take a personal interest in protecting that asset, your insurance policy becomes a backstop that you will do everything in your power to avoid collecting on. By comparison, when a bank bundles up a hundred mortgages under one insurance policy, there is no personal association with those assets calling into question whether they care if they default or not since they are covered by a CDS. Also, as with all insurance companies, underwriters need to look at individual policies and decide if the risk of writing the policy is worth taking…apparently, the underwriters at AIG were sleeping at the switch—or maybe “texting at the switch.”</p><p class="western" style="MARGIN-TOP: 0.08in">Once mortgage lenders realized they could transfer the risk of ninja loans to AIG for a portion of the premium being paid by their riskiest customers, they also realized that these payments were cutting into their profits. What do you do when your margins get thinned? Easy, make it up in volume!</p><p class="western" style="MARGIN-TOP: 0.08in">So by having the ability to dump the risk of bad loans onto AIG, lenders were incented to write as many loans as they could, knowing that they were insulated from defaults! Everyone was making money until the real estate bubble burst and then AIG was left holding the bag unable to pay the claims of their mortgage bank clients. When the music stopped, AIG didn’t have a seat.</p><p class="western" style="MARGIN-TOP: 0.08in"><b>Why bailout AIG and not other companies like Lehman Brothers. </b></p><p class="western" style="MARGIN-TOP: 0.08in">First we should be aware that the $85B that is going to AIG is not a gift. It’s a two year bridge loan at 11% interest for which we (the US government) receive 80% ownership of the company. This means that if we (since we are now the owners) are able to turn AIG around, we could make a hefty profit.</p><p class="western" style="MARGIN-TOP: 0.08in">Next, we need to consider what would have happened without this loan. If AIG was allowed to go under, they would not have been able to pay the insurance claims made by their customers, the banks who bought these policies to mitigate their risky loans. That would have caused all these banks to go under resulting in a much bigger and diffuse problem. While the world can exist with one less investment banking company (Lehman), it can’t exist without the far-reaching global tentacles of AIG. While I’m not for propping up private companies with public funds, in this case I believe it was the lesser of two evils…but I’m left with the nagging concern: <i>was $85B enough</i>?</p><p class="western" style="MARGIN-TOP: 0.08in"><b>What we need to do to avoid this problem in the future.</b></p><p class="western" style="MARGIN-TOP: 0.08in">We obviously need stricter regulations in the mortgage market; ninja loans should not be happening. Also, with proper underwriting, banks would not be able to insure their mortgages as easily and they might be more inclined to scrutinize the loans they make.</p><p class="western" style="MARGIN-TOP: 0.08in">Ultimately, we need to recognize the root cause of our economic/security/environmental issues is that $700B is being sucked out of our annual economy for the import of oil, from which we receive choking pollution and fund terrorists who want to kill their customers—primarily us. Fortunately <span style="color:#0000ff;"><u><a href="http://deadlyfreedom.com/2008/08/dave-spicer-carbonless-electric-economy.html">we have the technology available today</a></u></span> if we really want to solve the problem, and it would be self-funding. All we have lacked is the leadership in the White House and Congress—my distain is bipartisan—for the last seven years to make it happen.</p><p class="western" style="MARGIN-TOP: 0.08in">Imagine the benefit of keeping that $700B within the “friendly confines” of the “US of A” every year where it would wind up as income and savings for our families who would then be able to afford legitimate mortgages.</p><p class="western" style="MARGIN-TOP: 0.08in"><i>V1.2</i></p>HarleyDavehttp://www.blogger.com/profile/13596202686730076462noreply@blogger.com2tag:blogger.com,1999:blog-7798354116282031049.post-90884365534158084032008-09-15T07:40:00.000-07:002008-08-04T12:28:36.707-07:00Dave Spicer: Let's Stop Whining and Solve the Problem<P class=western id=o_r4 style="MARGIN-TOP: 0.08in">We’ve become a debtor nation of whiners, complaining about pollution, climate change and energy shortages along with our not unrelated growing national debt. Add to that our angst over terrorism and wars purported to defeat it, and you’re looking at a country that has made very little progress against any of these or the domestic issues like health care that they distract us from. While we’re all glad there have been no further terrorist attacks in this country, in a very real way terrorism has taken its toll on the advancement of our society for the last six years. Osama must be sitting back in his cave enjoying this. </P> <P class=western id=o_r40 style="MARGIN-TOP: 0.08in">Now, add to these the future concerns posed by unstable leaders in Iran and Venezuela who can hold a good portion of the world’s energy hostage, and ultimately a conflict with China over the earth’s dwindling resources and perhaps it’s time to look for a root cause. </P> <P class=western id=o_r41 style="MARGIN-TOP: 0.08in">So what do these seemingly solutionless issues have in common? They are all manifestations of the same problem that <I id=o_r42>can</I> be solved: our addiction to burning fossil fuels, primarily oil, for their energy content.</P> <P class=western id=o_r43 style="MARGIN-TOP: 0.08in"><B id=o_r44><I id=o_r45>We could be free of Middle East oil in 4-5 years, defeat terrorism without firing another shot, and bring our troops home with the honor they deserve!</I></B></P> <P class=western id=o_r46 style="MARGIN-TOP: 0.08in"><B id=o_r47>Geopolitics of Energy</B> is a blog dedicated to solving one of the more vexing problems of our time: the establishment of a carbonless energy society, an <FONT id=o_r48 color=#0000ff><U id=o_r49><A id=o_r410 href="http://geopoliticsofenergy.blogspot.com/2007/09/electric-economy-facts-within-fiction_15.html">Electric Economy</A></U></FONT> as envisioned by Doc Davidson in <FONT id=o_r411 color=#0000ff><U id=o_r412><A id=o_r413 href="http://geopoliticsofenergy.blogspot.com/2007/09/deadly-freedom-is-techno-thriller-based_15.html"><I id=o_r414>Deadly Freedom</I></A></U></FONT>. Solving this problem will alleviate many of the seemingly solutionless symptoms that plague our nation. The solution will also reestablish our country as a trusted leader of today’s global society, turn our massive trade deficit into a trade surplus, and allow us to focus our resources on other real problems like healthcare and improved education for our children.</P> <P class=western id=o_r415 style="MARGIN-TOP: 0.08in">This post is meant to be a roadmap or navigation aid for the other posts you will find here. This blog is now open to everyone for moderated commenting. Everyone can <FONT id=o_r416 color=#0000ff><U id=o_r417><A id=o_r418 href="http://www.feedblitz.com/f/?Sub=332114" target=_blank>register here</A></U></FONT> for free email updates when new articles are posted or current ones updated.</P> <P class=western id=o_r419 style="MARGIN-TOP: 0.08in"><B id=o_r420>A bit about my background</B>. I have a dual degree in Electrical Engineering and Computer Science from the University of Illinois, and a Masters Degree in Computer Science from Northwestern University. I have 30 years of industry experience beginning with IBM Research, AT&T Bell Laboratories, Oracle Corporation, and three startups. My knowledge and experience build on a foundation of mathematics, physics, and chemistry. I have spent the last two years vigorously researching a variety of energy technologies and the geopolitics of energy as it relates to the foreign policies of the largest industrialized nations. </P> <P class=western id=o_r421 style="MARGIN-TOP: 0.08in">I’m convinced we are still a nation of innovators who can produce the right idea(s) to overcome some very knotty problems. After two years of research I believe the ultimate solution is a strategy for this country with multiple moving parts that are more fully described in <FONT id=o_r422 color=#0000ff><U id=o_r423><A id=o_r424 href="http://geopoliticsofenergy.blogspot.com/2007/09/deadly-freedom-is-techno-thriller-based_15.html">my novel</A></U></FONT>. This is your chance to voice your opinion on such a strategy. The rewards for establishing a carbonless energy future will go to our children and theirs; it’s our turn to do the right thing. </P> <P class=western id=o_r425 style="MARGIN-TOP: 0.08in">The founders of this country did not allow themselves to be bullied by those who would dictate their lifestyle. They certainly would not want us to buckle under similar pressure from those who hold us hostage with their energy resources. One result for them was the Boston Tea Party. Perhaps it’s time for a “Boston <I id=o_r426>Oil</I> Party.” </P> <P class=western id=o_r427 style="MARGIN-TOP: 0.08in">It’s time to stop whining and solve the problem.</P> <P class=western id=o_r428 style="MARGIN-TOP: 0.08in"><I id=o_r429>V1.9</I></P>HarleyDavehttp://www.blogger.com/profile/13596202686730076462noreply@blogger.com6tag:blogger.com,1999:blog-7798354116282031049.post-16712924419781757492008-09-15T06:00:00.000-07:002008-08-04T12:29:31.669-07:00Dave Spicer: DEADLY FREEDOM<P class=western id=ngin style="MARGIN-TOP: 0.08in"><IMG id=ngin0 height=200 hspace=13 src="http://docs.google.com/File?id=ddp7qh8p_264d7qx8kdf_b" width=138 align=left border=0 name=graphics1> </P> <P class=western id=ngin1 style="MARGIN-TOP: 0.08in">We have been held hostage to our fears of terrorism, the Iraq War, pollution, global warming, climate change, and energy shortages for many years, paying untold billions of dollars combating them, not to mention the cost in human life. In fact, these fears are really unsolvable symptoms of a common solvable problem to which we pay just lip-service: our continued dependence on oil.</P> <P class=western id=ngin2 style="MARGIN-TOP: 0.08in">Clean, renewable energy is nature’s “Rubik’s Cube,” and arguably the most commercially valuable puzzle to solve. After years of research, Professor Jason “Doc” Davidson and his team of university researchers have cracked the code, but bringing their solution to market must overcome the challenges of those who see renewable energy as a threat. </P> <P class=western id=ngin3 style="MARGIN-TOP: 0.08in">DEADLY FREEDOM weaves fiction and fact into a tapestry of intrigue and conspiracy between OPEC, the oil and automotive industries, and our own government. Threats to this conspiracy are dealt with through strategic eliminations carried out by “The Club,” an assassination squad of rogue CIA double agents. As Davidson is going to find out, freedom comes at a cost, a cost justified by a country’s return to greatness.</P> <P class=western id=ngin4 style="MARGIN-TOP: 0.08in" align=center>-----</P> <P class=western id=ngin5 style="MARGIN-TOP: 0.08in"><B id=ngin6>DEADLY FREEDOM,</B> <FONT id=ngin7 color=#0000ff><U id=ngin8><A id=ngin9 href="http://www.amazon.com/Deadly-Freedom-Dave-Spicer/dp/0978721365">available here</A></U></FONT>, is a techno-thriller based on the technology and geopolitics of energy uncovered during two years of research. Click <FONT id=ngin10 color=#0000ff><U id=ngin11><A id=ngin12 href="http://picasaweb.google.com/harleydaves/DeadlyFreedom/photo#5177731356251804850" target=_blank>here</A></U></FONT> to see the cover (front and back) full size.</P> <P class=western id=ngin13 style="MARGIN-TOP: 0.08in">It would be nice to think that solving our core energy issue is strictly a technology exercise along the lines described in my post <FONT id=ngin14 color=#0000ff><U id=ngin15><A id=ngin16 href="http://geopoliticsofenergy.blogspot.com/2007/09/electric-economy-facts-within-fiction_15.html">An Electric Economy</A></U></FONT>. Unfortunately, there are many players in today’s fossil fuel world who will be adversely impacted by a carbonless energy future, including but not limited to: the oil industry, the automotive industry and its supply chains, OPEC countries and terrorists who feed off our current oil addiction—as a rule of thumb, if you subtract 80-cents from a gallon of gasoline, the remainder is what is going to OPEC. They have <I id=ngin17>trillions</I> of dollars of oil resources at risk.</P> <P class=western id=ngin18 style="MARGIN-TOP: 0.08in">DEADLY FREEDOM is a fictitious story about a real cause. The novel draws on the human drama associated with the financial upheaval of the industrialized world and those who feed our addiction brought about by the introduction of a carbonless energy solution. The story pits those who will benefit against those who will not. Which side will you be on?</P> <P class=western id=ngin19 style="MARGIN-TOP: 0.08in"><BR id=ngin20><BR id=ngin21></P> <P class=western id=ngin22 style="MARGIN-TOP: 0.08in"><I id=ngin23>V 1.6</I></P>HarleyDavehttp://www.blogger.com/profile/13596202686730076462noreply@blogger.com0tag:blogger.com,1999:blog-7798354116282031049.post-42634730018362074512008-09-09T08:19:00.000-07:002008-09-14T09:38:51.634-07:00Dave Spicer: First Atlanta Book Signing<p class="western" style="MARGIN-BOTTOM: 0in">I’m having my first book signing in Atlanta:</p><p class="western" style="MARGIN-BOTTOM: 0in; MARGIN-LEFT: 0.4in"><b>Saturday, September 20<sup>th</sup><br />From 3:00pm to 5:00pm</b></p><p class="western" style="MARGIN-BOTTOM: 0in; MARGIN-LEFT: 0.4in"><br /></p><p class="western" style="MARGIN-BOTTOM: 0in; MARGIN-LEFT: 0.4in"><b>Barnes and Noble (at “The Forum”)<br />5141 Peachtree Pkwy<br />Norcross, GA 30092<br />Phone (if you need it): (770) 209-4244</b></p><p class="western" style="MARGIN-TOP: 0.08in">Here’s a <span style="color:#0000ff;"><u><a href="http://www.mapquest.com/maps?city=Norcross&state=GA&address=5141+Peachtree+Pkwy">link to a map</a></u></span>.</p><p class="western" style="MARGIN-TOP: 0.08in">Given our recent experience with $4/gallon gas, our two presidential candidates have begun to push their energy plans. Unfortunately, they don’t understand that focusing on the energy problem should be our <u>highest</u> priority. In discussing their energy policies they both use the standard line, “let’s do ‘em all,” to which the republican likes to add, “keep drill’in!” Unfortunately, when it comes to energy, attempting a multiple-choice solution of incompatible technologies will result in doing none of them. I guess to get elected, candidates must tell the electorate what they want to hear and avoid offending the special interests. </p><p class="western" style="MARGIN-TOP: 0.08in">Now T. Boone Pickens has gotten into the act and while <span style="color:#0000ff;"><u><a href="http://www.pickensplan.com/index.php">his plan</a></u></span> will make him a lot of money, it <span style="color:#0000ff;"><u><a href="http://deadlyfreedom.com/2008/08/dave-spicer-pickens-picks-new-horse.html">won’t help us at all</a></u></span>.</p><p class="western" style="MARGIN-TOP: 0.08in">Since my character, Doc Davidson, isn’t running for office, he doesn’t care if he offends special interests with his “Carbonless Electric Economy” that not only solves the problem, but <span style="color:#0000ff;"><u><a href="http://deadlyfreedom.com/2008/08/dave-spicer-carbonless-electric-economy.html">pays for itself</a></u></span>!</p><p class="western" style="MARGIN-TOP: 0.08in">I would enjoy meeting each of you to discuss the characters and plot lines as well as the ideas in the book and what they could mean to the future of our economic and political well-being.</p><p class="western" style="MARGIN-TOP: 0.08in">Look forward to seeing you at “The Forum.”</p><p class="western" style="MARGIN-TOP: 0.08in">Dave Spicer (<span style="color:#0000ff;"><u><a href="http://www.amazon.com/Deadly-Freedom-Dave-Spicer/dp/0978721365">Book</a></u></span>, <span style="color:#0000ff;"><u><a href="http://www.deadlyfreedom.com/">Website</a></u></span>, <span style="color:#0000ff;"><u><a href="http://www.facebook.com/pages/David-Spicer/43603855672">FaceBook</a></u></span>)<br /></p>HarleyDavehttp://www.blogger.com/profile/13596202686730076462noreply@blogger.com0tag:blogger.com,1999:blog-7798354116282031049.post-48489289456937018602008-08-30T09:27:00.000-07:002008-11-09T06:25:27.702-08:00Dave Spicer: A Carbonless Electric Economy<p class="western" style="margin-top: 0.08in" id="oru6">Our fossil fuel economy has failed us. The world has hit its Peak Oil point where the energy required to retrieve a barrel of oil is close to exceeding the energy in that barrel of oil. This fact, along with the sharp increases in demand from recently energized economies like those of China and India, has caused oil prices to jump past the point where OPEC can pump enough oil to regulate them. We have placed our future into the hands of those who don’t want us to have one. Before proceeding, you may want to watch the video below for some background:</p><br /><object width="601" height="439"><param name="allowfullscreen" value="true" /><param name="allowscriptaccess" value="always" /><param name="movie" value="http://vimeo.com/moogaloop.swf?clip_id=2172081&server=vimeo.com&show_title=1&show_byline=1&show_portrait=0&color=00ADEF&fullscreen=1" /><embed src="http://vimeo.com/moogaloop.swf?clip_id=2172081&server=vimeo.com&show_title=1&show_byline=1&show_portrait=0&color=00ADEF&fullscreen=1" type="application/x-shockwave-flash" allowfullscreen="true" allowscriptaccess="always" width="601" height="439"></embed></object><br /><a href="http://vimeo.com/2172081">Carbonless Electric Economy</a> from <a href="http://vimeo.com/user906250">Dave Spicer</a> on <a href="http://vimeo.com">Vimeo</a>.<br /> <p class="western" style="margin-top: 0.08in" id="oru60">We need a wholesale replacement of our existing fossil fuel economy with an alternative energy economy. What is an energy economy? It’s the network of energy sources, distribution, and consumption that underlies the macro economies of the world. The good news is that we have at least 100 combinations and permutations of alternative technologies to eliminate our dependence on foreign oil. The bad news is that most of them don’t work. What does an energy economy have to provide to succeed?</p> <p class="western" style="margin-left: 0.5in; margin-top: 0.08in" id="oru61"> <b id="oru62">No “Science Projects” Required</b> – We need a solution that we can begin to implement immediately given the length of time it will take to deploy enough technology to significantly offset our oil dependence. All solutions will entail serious engineering projects, but none should require scientific breakthroughs. Thus, for example, solutions depending on nuclear fusion or “clean coal” should not be considered.</p> <p class="western" style="margin-left: 0.5in; margin-top: 0.08in" id="oru63"> <b id="oru64">Scalability</b> – It must be able to provide enough capacity to offset our entire use of imported oil.</p> <p class="western" style="margin-left: 0.5in; margin-top: 0.08in" id="oru65"> <b id="oru66">No Side-Effects</b> – It must not shift the problem from one scarce natural resource to another, e.g., from oil to natural gas.</p> <p class="western" style="margin-left: 0.5in; margin-top: 0.08in" id="oru67"> <b id="oru68">Improve the Environment</b> – The environmental impact of implementing the alternative must at least be no worse than what we have today.</p> <p class="western" style="margin-left: 0.5in; margin-top: 0.08in" id="oru69"> <b id="oru610">Economic Viability</b> – It must have an economic payback that justifies the billions of dollars of expense.</p> <p class="western" style="margin-top: 0.08in" id="oru611">When graded against these metrics, many of the popular alternatives being discussed fail miserably, including: The “<font color="#0000ff" id="oru612"><u id="oru613"><a href="http://geopoliticsofenergy.blogspot.com/2008/08/dave-spicer-pickens-picks-new-horse.html" id="oru614">Pickens Plan</a></u></font>,” ethanol, biofuels, the “hydrogen economy,” clean coal, and conservation.</p> <p class="western" style="margin-top: 0.08in" id="oru615">Fortunately, there is one combination of technologies that does meet all these criteria, a Carbonless Electric Economy.</p> <p class="western" style="margin-top: 0.08in" id="oru616">Electricity is our cleanest form of energy. It is also universal in that it can be used to power our factories, heat and cool our homes, cook our food, and power most of our transportation. We also have a significant amount of existing electricity distribution infrastructure in the form of the national electric grid that will lessen the amount of additional infrastructure required.</p> <p class="western" style="margin-top: 0.08in" id="oru617">Since all energy economies require sources, distribution, and consumption, so must the Electric Economy. Starting with consumption, we can see again that electricity is universal. The missing piece had been transportation, but given recent advances in Lithium Ion battery technology, driven by the popularity of laptop computers, we now have electric vehicles with ranges up to 250 miles on a charge and we are on a technology curve that will take us above 400 miles soon. The most important part of electric vehicles that makes the electric economy viable is their efficiency. </p> <p class="western" align="CENTER" style="margin-top: 0.08in" id="oru618"><img src="http://docs.google.com/File?id=ddp7qh8p_32698h99nrt_b" name="graphics1" align="BOTTOM" width="543" height="395" border="0" id="oru619"></p> <p class="western" style="margin-top: 0.08in" id="oru620"><br id="oru621"> <br id="oru622"> </p> <p class="western" style="margin-top: 0.08in" id="oru623">Electric vehicles travel 5 miles on a kilowatt hour of electricity that typically costs 10 cents, that’s 2 cents per mile. This is made possible by the fundamental property of electric motors; they are 90% efficient as compared to the 10% efficiency of internal combustion engines, regardless of the fuel they’re burning. Another use for electricity is in the area of home heating. Today, people in the northeast use mostly heating oil to heat water that is then circulated around their homes. This winter these people will be faced with $1,000/month heating bills and many will not be able to afford them. These heaters can be replaced with electric heaters and use the existing water pipes.</p> <p class="western" style="margin-top: 0.08in" id="oru624">As for distribution, we already have a massive amount of electricity distribution in place to every home and business. Electric vehicles can be recharged by plugging them in to a standard 120v electrical outlet.</p> <p class="western" style="margin-top: 0.08in" id="oru625">While we already have enough electrical capacity to charge about 10% of our existing LDV fleet when it becomes electric vehicles, we will need to add capacity to support the entire fleet. We are fortunate to have what amounts to a “solar furnace” in our desert southwest with enough capacity to power 15-20 countries our size, and that includes the current one-terawatt of capacity we have today, plus the additional capacity to power all 200M electric LDVs. While our first target should be providing enough solar power for our LDVs, we should not stop there, we can also replace all the coal, natural gas, and nuclear generated power with the same technology.</p> <p class="western" style="margin-top: 0.08in" id="oru626">Now we need to see how the carbonless electric economy measures up against the metrics we spoke of above:</p> <p class="western" style="margin-left: 0.5in; margin-top: 0.08in" id="oru627"> <b id="oru628">No “Science Projects” Required</b> – While implementing the Electric Economy will certainly entail some large engineering projects, all the core science for generation, distribution, and consumption is in place.</p> <p class="western" style="margin-left: 0.5in; margin-top: 0.08in" id="oru629"> <b id="oru630">Scalability</b> – As mentioned, we have enough solar thermal power in our desert southwest to power 15-20 countries our size. Capacity will not be a problem.</p> <p class="western" style="margin-left: 0.5in; margin-top: 0.08in" id="oru631"> <b id="oru632">Side-Effects</b> – Ultimately the electric economy can completely offset our current fossil fuel generation of electricity.</p> <p class="western" style="margin-left: 0.5in; margin-top: 0.08in" id="oru633"> <b id="oru634">Environment</b> – Solar thermal energy is powered by the sun. There is no carbon required for generation, and none is produced by the electric motors and heaters that consume this electricity. The electric economy is carbonless from end to end.</p> <p class="western" style="margin-left: 0.5in; margin-top: 0.08in" id="oru635"> <b id="oru636">Economic Viability</b> – The electric economy is the hands-down winner when it comes to economic benefit for this country. Not only will the electric economy pay for itself, the technology will become a key export for our country’s rebirth as an economic leader.</p> <p class="western" style="margin-top: 0.08in" id="oru637">To understand the economics of this solution, we need to begin with electric vehicles. The internal combustion vehicles we drive today get, on average, 20 miles per gallon. At $4 per gallon, it costs 20-cents per mile for fuel alone. As discussed, electric vehicles can be operated for 2-cents per mile for a savings of 18-cents per mile. Given the average light duty vehicle travels 13,000 mile a year, this means an electric vehicle will save the owner $2300 per year. And these savings are for energy only, they do not include savings from the elimination of: oil changes, tune-ups, emission checks, etc.</p> <p class="western" style="margin-top: 0.08in" id="oru638"><br id="oru639"> <br id="oru640"> </p> <p class="western" align="CENTER" style="margin-top: 0.08in" id="oru641"><img src="http://docs.google.com/File?id=ddp7qh8p_327c5tw72f6_b" name="graphics2" align="BOTTOM" width="556" height="367" border="0" id="oru642"></p> <p class="western" style="margin-top: 0.08in" id="oru643"><br id="oru644"> <br id="oru645"> </p> <p class="western" style="margin-top: 0.08in" id="oru646">The picture above summarizes the economics of the Electric Economy. We have an LDV fleet of 200M vehicles that turn over at the rate of 20M, or 10%, per year. When 10% of our fleet are electric vehicles, it will take an investment of $25B in solar thermal generation of 10 GW to support the additional charging capacity required with $600M per year to operate and maintain the facility. However, these 20M vehicles will each be saving $2300 per year resulting in a savings of $46B per year! And these savings are <u id="oru647">cumulative</u>! The next 10%, or 20M vehicles will save another $46B per year for a total of $92B per year, while requiring another $25B in construction.</p> <p class="western" style="margin-top: 0.08in" id="oru648">When fully implemented with electric LDVs, we will be saving $460B per year with an annual outlay to operate and maintain our generation investment of $6B annually, an annual net benefit of $450B—imagine what this country could do with that kind of surplus. As for energy costs, solar thermal fuel, the sun, is free and carbonless. This has been the case for the last 4.5 billion years and it will be for the next 7 billion years. After that, let’s agree to leave what we do next to future generations.</p> <p class="western" style="margin-top: 0.08in" id="oru649"><br id="oru650"> <br id="oru651"> </p> <p class="western" align="CENTER" style="margin-top: 0.08in" id="oru652"><img src="http://docs.google.com/File?id=ddp7qh8p_3287npq7vhd_b" name="graphics3" align="BOTTOM" width="455" height="342" border="0" id="oru653"></p> <p class="western" style="margin-top: 0.08in" id="oru654"><br id="oru655"> <br id="oru656"> </p> <p class="western" style="margin-top: 0.08in" id="oru657">We are fortunate to have a “solar furnace” in our desert southwest, but we are not alone. As the picture above shows, there is a “belt” of solar intensity around the globe extending about 30 degrees either side of the equator. Each 120 square miles of this space is worth $25B in revenue to the country that can export its Electric Economy technology.</p> <p class="western" style="margin-top: 0.08in" id="oru658">Shouldn’t that be us?</p> <p class="western" style="margin-top: 0.08in" id="oru659"><br id="oru660"> <br id="oru661"> </p> <p class="western" style="margin-bottom: 0in" id="oru662">Mr. Spicer is the author of <font color="#0000ff" id="oru663"><u id="oru664"><a href="http://www.amazon.com/Deadly-Freedom-Dave-Spicer/dp/0978721365" id="oru665"><i id="oru666">Deadly Freedom</i></a></u></font>, a novel based on the real science of clean, abundant energy provided by a carbonless electric economy.</p> <p class="western" style="margin-top: 0.08in" id="oru667"><br id="oru668"> <br id="oru669"> </p> <p class="western" style="margin-top: 0.08in" id="oru670"><i id="oru671">V 1.7</i></p> <br id="oru672">HarleyDavehttp://www.blogger.com/profile/13596202686730076462noreply@blogger.com3tag:blogger.com,1999:blog-7798354116282031049.post-91065864359858346242008-08-30T08:43:00.000-07:002008-09-12T15:17:40.391-07:00Dave Spicer: Pickens Picks a New Horse - the Wrong One<p class="western" style="MARGIN-TOP: 0.08in">Our current fossil fuel-based energy economy is broken and no amount of drilling will have an appreciable long-lasting impact on oil prices. The world’s economies are sliding inexorably down the slope of the global Peak Oil curve that was predicted by a Shell Oil geologist back in the 1950’s.</p><p class="western" style="MARGIN-TOP: 0.08in">What is an energy economy? It’s a network of energy sources, distribution, and utilization that today is dominated by oil wells and coal mines; oil pipelines and tankers; and cars and trucks respectively. We need a replacement energy economy that will sever our dependence on unstable governments who care only for our money to fund terrorists bent on our destruction. We need a replacement that will strengthen our economies and not weaken them, and lastly, we need a replacement that will clean our fouled environment.</p><p class="western" style="MARGIN-TOP: 0.08in">It’s refreshing, then, that a tycoon like <span style="color:#0000ff;"><u><a href="http://www.pickensplan.com/" target="_blank">T. Boone Pickens is backing a replacement</a></u></span> for the commodity which made him a billionaire, oil. It seems Mr. Pickens invested heavily in natural gas in the late nineties and just last year invested heavily in wind farms. His solution—not surprisingly based on wind and natural gas—is to develop massive wind farms to generate enough electricity to offset the electricity we currently generate from natural gas—about 20% of our total electrical generation capability—and utilize the saved fuel to power natural gas-driven vehicles.</p><p class="western" style="MARGIN-TOP: 0.08in">There are many candidate architectures for replacing our current fossil fuel economy and when you enumerate all the possible combinations of energy sources, distribution, and utilization, they number about one-hundred, most of which don’t work. Mr. Pickens’ proposal is one of these, and unfortunately, it’s one that doesn’t work for a variety of reasons:</p><p class="western" style="MARGIN-TOP: 0.08in">Wind turbines generate electricity, but wind, by its very nature, is unpredictable, which makes the electricity generated unpredictable. Wind energy is currently being used successfully by farmers and even small communities, but in all cases, these applications rely on the existing electric grid during times of insufficient wind. But Mr. Pickens proposal is to use wind for utility grid generation, for which there is no backup. Inconsistency by itself is not a deal-breaker. As long as you have the ability to store the energy generated you can generate enough excess energy such that the average output is sufficient to power the loads from storage. Storing electricity requires batteries, and while there have been important breakthroughs in battery technology to power electric vehicles with capacities of 40-50 kilowatt hours, storing enough electricity to power the grid would require batteries millions of times larger, a technology we do not possess.</p><p class="western" style="MARGIN-TOP: 0.08in">Mr. Pickens has been an advocate of natural gas fueled vehicles for some time. Unfortunately, natural gas vehicles are still powered by internal combustion engines that are only ten-percent efficient, regardless of the fuel they’re burning. In 2006 we imported <span style="color:#0000ff;"><u><a href="http://74.125.45.104/search?q=cache:xUXo11-G3t0J:factsonenergy.com/wp-content/uploads/2007/11/natural_gas.pdf+us+natural+gas+import+percentage&hl=en&ct=clnk&cd=5&gl=us">20% of our natural gas</a></u></span>. Also in 2006 we <span style="color:#0000ff;"><u><a href="http://tonto.eia.doe.gov/dnav/ng/hist/n9140us2m.htm">consumed 21 Trillion Cubic Feet</a></u></span> and had <span style="color:#0000ff;"><u><a href="http://www.infoplease.com/ipa/A0872966.html">reserves of 193 Trillion Cubic Feet</a></u></span> and our consumption has been increasing by 6.5% per year since 2006 . <b>This means that if we could somehow find a way to eliminate natural gas imports completely, we would have enough reserves to last only 9 years, after which we would be importing <u>all</u> of a commodity which the Pickens Plan would have committed us to</b>. Any attempt to move a significant amount of our transportation to a natural gas platform will result in massive importation of a commodity that we import too much of already. In effect, we would be shifting our dependence on unstable oil producers to unstable natural gas producers, which in many cases are one and the same. And being carbon-based, burning natural gas in our vehicles would do little to mitigate the carbon dioxide generated.</p><p class="western" style="MARGIN-TOP: 0.08in">Lastly, the economics behind Mr. Pickens proposal, while obviously beneficial to his companies, do not make sense for our country. It will take many billions of dollars to create enough wind farms to offset our electric generation from natural gas and convert our cars to run on natural gas. How will we pay for this investment? Nothing in his architecture provides any savings since we would just be shifting our expenses from oil to natural gas. In addition, there would be infrastructure expenses in getting enough natural gas to our current gas stations, not to mention funding the natural gas refueling devices that would be needed at thousands of stations.</p><p class="western" style="MARGIN-TOP: 0.08in">Fortunately, of the hundred possible energy economy architectures there is at least one that does make sense, and that is moving to a <span style="color:#0000ff;"><u><a href="http://geopoliticsofenergy.blogspot.com/2008/08/dave-spicer-carbonless-electric-economy.html">Carbonless Electric Economy</a></u></span>, one that leverages our new battery technology for electric vehicles, our existing electric grid infrastructure, and the development of solar thermal electricity generation in our desert southwest that would be completely funded by the 90% efficiency of electric vehicles when compared to their 10% efficient internal combustion counterparts.</p><p class="western" style="MARGIN-TOP: 0.08in">Our politicians, especially the two running for the highest office, like to tell us that the solution is “do them all” and quickly rattle off biofuels, solar, geothermal, wind, etc. Of course they’re in the business of telling people what they want to hear, not what they need to hear. The danger is that any attempt to do all of these will result in none. We have neither the time nor money to attempt multiple incompatible paths, which means we need to do the careful analysis it takes to pick the right one.</p><p class="western" style="MARGIN-TOP: 0.08in">Mr. Pickens has a new horse in this race, unfortunately he’s riding the wrong one. He’s competing with the Carbonless Electric Economy that will: provide carbonless electricity generation with no fuel costs, utilize our existing electric grid distribution infrastructure and be self-funding given the efficiency of electric vehicles.</p><p class="western" style="MARGIN-TOP: 0.08in"> </p><p class="western" style="MARGIN-TOP: 0.08in">Mr. Spicer is the author of <span style="color:#0000ff;"><u><a href="http://www.amazon.com/Deadly-Freedom-Dave-Spicer/dp/0978721365"><i>Deadly Freedom</i></a></u></span>, a novel based on the real science of clean, abundant energy provided by an electric economy.</p><p class="western" style="MARGIN-TOP: 0.08in"><i></i> </p><p class="western" style="MARGIN-TOP: 0.08in"><i>V 1.2</i></p>HarleyDavehttp://www.blogger.com/profile/13596202686730076462noreply@blogger.com0tag:blogger.com,1999:blog-7798354116282031049.post-77218113428169508242008-08-21T11:39:00.000-07:002008-08-21T11:40:48.313-07:00Dave Spicer: A Message to the "Facebook Generation"<P CLASS="western" STYLE="margin-top: 0.08in">My daughters have been after me to join Facebook for some time. A year ago, while still in the throes of writing my novel, I got a Facebook ID but could find very few members of my generation and my login sat essentially idle. Finally finishing the novel, I realized that the target audience for <FONT COLOR="#0000ff"><U><A HREF="http://www.amazon.com/Deadly-Freedom-Dave-Spicer/dp/0978721365"><I>Deadly Freedom</I></A></U></FONT> IS the Facebook Generation—and beyond, and that I was communicating across generations. What better way to continue this communication than Facebook.</P> <P CLASS="western" STYLE="margin-top: 0.08in">Here’s why this is important to you: Every generation picks up where the last leaves off and inherits the state of the world at that point. My parents were called the “Greatest Generation” by Tom Brokaw and given that they grew up surviving the depression and still managed to win the last real war worth fighting, they probably deserve that title and will for some time. They left the “Baby Boomer” generation, mine, with a world that was in reasonably good order and with an economy that I and my “Baby Boomer” friends took advantage of. The end of World War II did leave us with the Cold War and they sent us off to fight in Viet Nam…seems every generation needs its war, even if it’s a mistake.</P> <P CLASS="western" STYLE="margin-top: 0.08in">For our part, we Boomers had a good run for a long time. We brought you the PC, relational databases, the Internet, and Cell Phones. We had an economy that was booming and it looked like we were going to hand you a legacy on which you could build—until September 11, 2001. </P> <P CLASS="western" STYLE="margin-top: 0.08in">9/11 was a pivotal moment. It exposed to us our vulnerability. It put a very fine point on how dependent we had become on oil imports from countries that were, ironically, willing to literally kill their own customers. We had quickly gone from globalizing individual companies, to a global economy, to a global society in which everything from jobs and crime could now cross international borders. It also gave us the opportunity to make the next great decision—how we would react to the 9/11 event. </P> <P CLASS="western" STYLE="margin-top: 0.08in">At first we did the right and logical thing by going after Al Qaeda in Afghanistan. Then, when we should have been focusing on the root cause of the issues that were suddenly confronting us, namely our addiction to oil, we made what may turn out to be the biggest mistake in the history of Western Civilization—we invaded Iraq. </P> <P CLASS="western" STYLE="margin-top: 0.08in">I assure you that I am not anti-war. We always need to be prepared to defend our country from real threats. I am, however, anti-mistake, and certainly anti-“not learning from our mistakes.” The Viet Nam war was a mistake. It cost us 50,000 citizens to realize that not every country needs to be a democracy. Democracies, like our own, need to be developed from the inside, and ours is a marvel of circumstances revolving around an alignment of genius at the right point and at the same time to make it come about. Our involvement in Viet Nam began in 1955 with our role as advisors. Between 1965 and 1975 we became active participants and at the end of those ten years we pulled out having lost 50,000 people. By 1995 we had restored diplomatic relations with the now-communist Viet Nam, and since 2005 they enjoy full economic relations with us and the West, recently hosting international beauty contests. So what was the point?</P> <P CLASS="western" STYLE="margin-top: 0.08in">Invading Iraq became an obsession with an administration that was looking for a reason to do just that. If you’ve read my book, you may have picked up on this issue. They needed a reason and conveniently, one surfaced—or was made to surface. Weapons of Mass Destruction became our new bogey-man and our Texan president violated the “Make sure you’re right, then go ahead” philosophy of a real Texas hero, Davy Crockett, and invaded. So instead of facing the real issue, eliminating our dependence on oil, our oilman administration decided it was worth 4,000 lives and $12B a month to somehow protect our oil interests in the Middle East in an attempt to prolong our day of reckoning.</P> <P CLASS="western" STYLE="margin-top: 0.08in">And of course, it’s done nothing but exacerbate our problems. You, the Facebook Generation, are now bearing the cost of our lack of leadership, and it’s going to get worse until we do something about it. You are the people doing the fighting and dying in Iraq. You are the people who will realize that our $12B per month expense for the war is being funded by the $12B we borrow monthly from China. You are the people who will be saddled with repaying that debt.</P> <P CLASS="western" STYLE="margin-top: 0.08in">And the problems of terrorism, wars purported to defeat it, declining dollar and economy will continue until we face the real issue, eliminating our dependence on foreign oil. Doc Davidson and his team of researchers have an approach called an <FONT COLOR="#0000ff"><U><A HREF="http://geopoliticsofenergy.blogspot.com/2007/09/electric-economy-facts-within-fiction_15.html">Electric Economy</A></U></FONT> that will not only eliminate our oil imports and their carbon aftereffects, but will pay for itself and leave you with an exportable capability that will make you the Saudi Arabia of clean energy. </P> <P CLASS="western" STYLE="margin-top: 0.08in">As for my generation, while we won’t be the Greatest Generation, it’s not too late to be great.</P> <P CLASS="western" STYLE="margin-top: 0.08in">Enjoy the read. Remember, while the story is fiction, the science is not.</P>HarleyDavehttp://www.blogger.com/profile/13596202686730076462noreply@blogger.com0tag:blogger.com,1999:blog-7798354116282031049.post-84105180756242504292008-08-04T07:10:00.000-07:002008-09-11T12:31:16.839-07:00Dave Spicer: Senator Obama, Real Leaders Have a Strategy<p class="western"><span style="font-family:Verdana, sans-serif;"><b>Dave Spicer: Senator Obama, Real Leaders Have a Strategy</b></span></p><p class="western">“<span style="font-family:Verdana, sans-serif;">Mr. Gorbachev, tear down this wall!” Ronald Regan’s mantra was simple but effective in ending the Cold War. Achieving this goal involved a lot of moving parts, but he had a strategy for ending the cold war and we knew what was important.</span></p><p class="western">“<span style="font-family:Verdana, sans-serif;">It’s the economy, stupid!” While Bill Clinton had his problems in office, his catch phrase defined his strategy. It seems that politicians and mere mortals alike are most successful when they can focus on one overarching vision, a strategy. </span></p><p class="western"><span style="font-family:Verdana, sans-serif;">Our two candidates today expound on a plethora of maladies confronting us including terrorism, the Iraq war, global warming, our ever-weakening economy and the energy crisis, with gas prices breaking records daily. But neither Obama nor McCain has established a focused message, a rallying cry for the people. Where is their equivalent of “It’s the economy, stupid!” or “Tear down this wall!”?</span></p><p class="western"><span style="font-family:Verdana, sans-serif;">Our country’s current dire situation has been brought about by seven years of inept and leaderless government in Washington—and my disdain is bipartisan. Proving a negative is often difficult and sometimes impossible, but proving we’ve had no leadership in Washington is relatively easy. I challenge anyone to recite our country’s current strategy in 50 words or less… Time’s up! No strategy, ergo, no leadership. QED. Ultimately, the electorate needs to take responsibility and I shoulder my share, but given only a choice between dumb and dumber I’ll vote for dumb every time. It appears though that this time we at least have two intelligent choices. However, since both Obama and McCain have been active participants in this inactive government of ours it’s fair to ask why they will be able to demonstrate leadership now when they didn’t in the past? </span></p><p class="western"><span style="font-family:Verdana, sans-serif;">Senator Obama’s intelligence, communications skills, and charisma have captured the hearts and minds of Americans like no other since JFK—and I’m old enough to make the comparison. Of the two presumptive candidates left standing I believe he has the best chance of winning and actually making a positive change, of being what we’ve lacked for so long, a real leader. But to do so, he needs more than charisma and oratory skills; he needs a strategy, a vision as bold as the ones employed by his (successful) predecessors. </span></p><p class="western"><span style="font-family:Verdana, sans-serif;">Of the maladies above that confront us, one stands out, unique among the rest: energy. A bit of thought will uncover that what makes energy unique in our list is that the other issues are all manifestations of it. We can actually do something about this, namely on our dependence on oil. It’s interesting that while the economy is still an issue, it’s been downgraded to a symptom of what should be our new mantra, “It’s energy, stupid!”</span></p><p class="western"><span style="font-family:Verdana, sans-serif;">Having energy as the primary focus is a good start, but then we need to make choices about which of the many energy paths to follow. Again, both candidates, when discussing energy policy, rattle off the standard list of solar, nuclear, wind, biofuels, etc. claiming that we need to do all of these. Unfortunately that just highlights their degree of misunderstanding and lack of knowledge. Any attempt to employ all forms of energy transformation will result in none. We simply don’t have the time or resources, and when a bit of thought is put to each of these, most will be found to fail, in spite of having been pushed by their respective K Street lobbyists. </span></p><p class="western"><span style="font-family:Verdana, sans-serif;">What we need is not just a replacement for oil, but for the internal combustion engines that need it. We need a wholesale replacement of our current fossil fuel economy with one that will alleviate the symptoms contributing to our demise and will put this country back on track to its rightful place in the world order. </span></p><p class="western"><span style="font-family:Verdana, sans-serif;">A bit of research will indicate that we have two options for an energy economy replacement: hydrogen and electricity. The oil companies are quick to point out their work on the “hydrogen economy” and almost gleefully tell us that while the idea looks promising, we are decades away from having the infrastructure necessary to support it. Hydrogen economy advertisements portray oil companies as caring global citizens while in actuality it’s allowing them to continue gouging us at the pump for at least the next twenty years…clever PR.</span></p><p class="western"><span style="font-family:Verdana, sans-serif;">The replacement for our current fossil fuel economy that can be achieved and that uses much of the infrastructure in place today is a </span><span style="color:#0000ff;"><u><a href="http://geopoliticsofenergy.blogspot.com/2008/08/dave-spicer-carbonless-electric-economy.html"><span style="font-family:Verdana, sans-serif;">Carbonless Electric Economy</span></a></u></span><span style="font-family:Verdana, sans-serif;">. Recent breakthroughs in battery technology for use in electric vehicles and solar thermal generation of electricity can use the existing electrical grid to distribute energy to every home and business allowing us to charge our cars overnight, not unlike our cell phones. In addition, the resultant “network” of solar electricity generation, distribution through our existing electric grid, and consumption by electric vehicles will be carbonless end to end.</span></p><p class="western"><span style="font-family:Verdana, sans-serif;">So, Senator Obama, be a real leader and have a strategy, one that will lift this country back to its rightful place: “It’s an electric economy, stupid!”</span></p><p class="western"><span style="font-family:Verdana, sans-serif;">Mr. Spicer is the author of</span><span style="color:#0000ff;"><u> <a href="http://www.amazon.com/Deadly-Freedom-Dave-Spicer/dp/0978721365http:/www.amazon.com/Deadly-Freedom-Dave-Spicer/dp/0978721365"><span style="font-family:Verdana, sans-serif;">Deadly Freedom</span></a></u></span><span style="font-family:Verdana, sans-serif;">, a novel based on the real science of clean, abundant energy provided by an electric economy.</span></p><br /><p class="western"><i><span style="font-family:Verdana, sans-serif;">V1.2</span></i></p>HarleyDavehttp://www.blogger.com/profile/13596202686730076462noreply@blogger.com0tag:blogger.com,1999:blog-7798354116282031049.post-40346162186906345492008-01-29T06:38:00.000-08:002008-08-04T12:27:47.662-07:00Dave Spicer: Help Wanted: A President for the Issue of Our Time<P class=western style="MARGIN-BOTTOM: 0in">Want to shake up the election? Instead of allowing the candidates to define the issues, why not have the electorate define the issues and then pick our leader(s) who will do the best job of solving them.</P> <P class=western style="MARGIN-TOP: 0.08in">We have several contenders for the title “Issue of Our Time.” We need a presidential candidate to rally the country around a cause, and solving the “Issue of Our Time” would certainly be cause for such a rally. But what is the Issue of Our Time?</P> <P class=western style="MARGIN-TOP: 0.08in">G<IMG height=286 hspace=13 src="http://docs.google.com/File?id=ddp7qh8p_144f6j9v6dp" width=425 align=left border=0 name=graphics1>lobal Warming and its associated climate change should be on our list of contenders. Al Gore recently received a Nobel Prize for keeping Global Warming in the headlines, but after many years and numerous treaties, we haven’t really made any headway in combating it. Perhaps that’s because Global Warming isn’t really a problem, it’s a symptom of the real problem, our continued use of fossil fuels.</P> <P class=western style="MARGIN-TOP: 0.08in">How about energy shortages, that would be a good rallying cry. In the 1970’s we reached what M. King Hubbert, a Shell engineer, called “Peak Oil” in <FONT color=#0000ff><U><A href="http://www.mkinghubbert.com/files/1956.pdf" target=_blank>his 1956 paper</A></U></FONT>. We are now seeing oil hovering around the $100/barrel mark and its fossil fuel siblings: natural gas, propane, heating oil, etc., have had proportional price increases. In his seminal paper, Mr. Hubbert forecasted domestic US oil production would peak in the 1970’s and history has borne him out. He also predicted that global oil production would peak around 2010, and it appears we may have reached that point as early as 2008. One way to eliminate energy shortages is to use less energy, but we all know that won’t happen. The other way is to focus on the root cause of the problem and shift our energy diet away from limited fossil fuels and begin using another form of energy.</P> <P class=western style="MARGIN-TOP: 0.08in">Then there’s always the economy, perhaps that’s the issue to focus on. After all, it worked for Bill “It’s the economy stupid” Clinton. We have a serious weakening of the dollar; a horrible trade imbalance, particularly with countries like China; and we’ve become a debtor nation. One “band aide” for our economic ills is to continue to lower interest rates, that always provides a needed boost in the market, at least until the next one is needed, further weakening the dollar. Instead, maybe we should focus on the root cause of the problem; oil is the single largest component of our trade imbalance. If we curtailed our use of oil and shifted to a different energy technology curve, we could become exporters of that technology.</P> <P class=western style="MARGIN-TOP: 0.08in">Lastly, there’s terrorism, an issue that since 911 keeps us all awake at night. After almost five years of fighting in Iraq, we are no closer to “defeating” terrorism than we were the day after 911 and we’ve been spending thousands of lives and about $10B per month in this effort. The foreign policies of the industrialized world are now being dictated by OPEC and a handful of irrational dictators whose only claim to fame is the oil they’re sitting on. Perhaps we should face the root cause of the problem and stop using oil and other fossil fuels, reducing the financial and political influence of terrorists and terrorism to zero.</P> <P class=western style="MARGIN-TOP: 0.08in">So perhaps, just perhaps, the “Issue of Our Time” is not any of these seemingly unsolvable problems, perhaps the “Issue of Our Time” is the root cause of all of them, our continued use of oil. And here’s the interesting part, we now have the technology to achieve this through the replacement of our current fossil fuel economy with a “<FONT color=#0000ff><U><A href="http://deadlyfreedom.com/2007/09/electric-economy-facts-within-fiction_15.html">Carbonless Electric Economy</A></U></FONT>.”</P> <P class=western style="MARGIN-TOP: 0.08in">Energy economies have three components: sources of energy, uses of that energy, and distribution to connect the uses to the sources. Today’s fuel economy is fossil fuel based. The uses, or sinks, burn these fuels to provide our transportation and electricity, and the distribution channel uses fossil fuels to transport oil and gas in ships and trucks to the places where they are ultimately consumed—burned.</P> <P class=western style="MARGIN-TOP: 0.08in">In a Carbonless Electric Economy the source of the electricity is the sun, distribution takes place over electric transmission lines, and the uses turn electricity into transportation, heat for our homes, and energy for our factories. Not a single carbon atom is consumed or a single molecule of CO<SUB>2</SUB> is produced. This technology is applicable to all the industrialized nations of the world and as such its export would reverse our trade deficit, it would cap the generation of CO<SUB>2 </SUB>allowing the earth’s atmosphere to heal itself, and it would remove the financial and political influence of those intent on terrorizing a world that really just wants to work and receive the benefits from that work.</P> <P class=western style="MARGIN-TOP: 0.08in">This is the scenario within my novel <FONT color=#0000ff><U><A href="http://geopoliticsofenergy.blogspot.com/2007/09/deadly-freedom-is-techno-thriller-based_15.html">DEADLY FREEDOM</A></U></FONT>.</P> <P class=western style="MARGIN-TOP: 0.08in">We have been tilting at the windmills of terrorism, global warming, energy shortages and climate change too long. A telltale sign of leadership is strategy and for the last seven years this country of 300 million people has been without a strategy, ergo, without leadership. Where is the presidential candidate who will focus on the Issue of Our Time? </P> <P class=western style="MARGIN-TOP: 0.08in"><BR><BR></P> <P class=western style="MARGIN-TOP: 0.08in"><I>V1.3</I></P>HarleyDavehttp://www.blogger.com/profile/13596202686730076462noreply@blogger.com0tag:blogger.com,1999:blog-7798354116282031049.post-21738536495004646502007-11-20T12:29:00.000-08:002007-12-03T12:13:37.173-08:0011/20/2007 - A Business Proposition for America<P class=western style="MARGIN-TOP: 0.08in">We can develop the Electric Economy for NO MONEY DOWN! At the risk of sounding like a real estate commercial, the establishment of the <FONT color=#0000ff><U><A href="http://geopoliticsofenergy.blogspot.com/2007/09/electric-economy-facts-within-fiction_15.html">Electric Economy</A></U></FONT> can be completely self-funded; we just need to do things in the right order. But “no money down” doesn’t mean “no money at all.” <B>Would you be willing to spend $106 per year to save $3300 per year? If so, Read on. If not, make an appointment with your financial advisor <U><I>NOW</I></U>. </B></P> <P class=western style="MARGIN-TOP: 0.08in">As a <I>disruptive techno-thriller</I>, my novel, <FONT color=#0000ff><U><A href="http://geopoliticsofenergy.blogspot.com/2007/09/deadly-freedom-is-techno-thriller-based_15.html">DEADLY FREEDOM</A></U></FONT>, has three objectives. The first is to <I>entertain</I>. If it’s entertaining, more people will read it and possibly be influenced by it. While (hopefully) being entertained, I’d also like the book to <I>inform</I> you about the geopolitics of energy that exists today, and with the help of some technology, show you what the world could look like if we step up to the plate. Once informed, I’d like you to be <I>motivated</I>, motivated to take action and insist that we move to solve the issue of our time. DEADLY FREEDOM is really a business proposition for America, a proposition that will eliminate our dependence on oil—first foreign, and then domestic. A byproduct of this proposition is that the solution will also eliminate the other symptoms I describe, including: terrorism, pollution, energy shortages, global warming and climate change. So fasten your seatbelts, I’m about to pitch you on investing in the Electric Economy.</P> <P class=western style="MARGIN-TOP: 0.08in">The solution I propose in my book will be expensive, expensive enough that it will need to be supported by a majority of us. The question then becomes—and should be—what’s the payback? What’s in it for us? There will be two components to the return on our investment, one measured in hard dollars, the other in “soft” benefits that would be difficult to quantify, but valuable nonetheless. Let’s focus on the hard-dollars, first at a summary level and then in more detail.</P> <P class=western style="MARGIN-TOP: 0.08in">This country currently consumes 21M barrels of oil per day, importing 60% of that oil from a variety of sources outside of our country. Fortunately, one-third of our imports are from Canada and Mexico leaving a total of 40% of our imports coming from OPEC countries that directly or indirectly sponsor terrorists and terrorism.</P> <P class=western style="MARGIN-TOP: 0.08in">When we look at how we utilize the oil we consume, we find that 65% of our oil is used for transportation, and of that, 65% is used for what the government calls Light Duty Vehicles, or LDVs, including cars, light trucks, and SUVs, essentially vehicles that run on gasoline as opposed to diesel or other “heavier” fuels. Since 65% of 65% is 42% of the total, if we eliminate our use of gasoline for our fleet of 200M LDVs we can stop importing oil from those who would harm us. This should be our first priority and is the focus of this posting.</P> <P class=western style="MARGIN-TOP: 0.08in">The challenge becomes: how much additional electricity will we need to generate if all 200M vehicles in our LDV fleet were electric vehicles, and where will we get it? According to US statistics, the average LDV drives 13,000 miles per year which amounts to 2.6 trillion miles per year for the entire fleet. On average, an electric vehicle can travel 5 miles on a kwh of electrical energy. This means we would need about 0.5 trillion kwh of electricity to operate all the electric vehicles that will be displacing the current internal combustion fleet. It has been estimated that we have enough excess capacity in the off-peak evening hours to support 10-20% of our LDV fleet when it becomes electric. It turns out that this 10-20% excess evening capacity is the key to kick-starting the Electric Economy as will be shown in the detailed analysis below. For this summary analysis it means we would need to add 0.4 trillion kwh of capacity to a system that is already generating 4 trillion kwh per year, a 10% increase.</P> <P class=western style="MARGIN-TOP: 0.08in">We then need to convert this additional energy requirement to power generation taking into account peaks that will emerge in what is currently the off-peak evening period. Dividing our needed annual increase by 365 will yield the energy we need to generate per day. Multiplying by two-thirds and dividing by 8 hours will model our usage of this technology such that two-thirds of our vehicles will be charging in an eight hour period in the evening. This works out to requiring an additional 90 gigawatts of peak power generation, which is again, about 10% of our current 1 terrawatt peak generation capacity.</P> <P class=western style="MARGIN-TOP: 0.08in" align=center><IMG height=406 src="http://docs.google.com/File?id=ddp7qh8p_127dq6p74fs" width=537 align=bottom border=0 name=graphics1></P> <P class=western style="MARGIN-TOP: 0.08in">Referring to the picture above, my research indicates that generating solar thermal energy from our “solar furnace” would best be done in modules of 10 GW each, transporting this energy using <FONT color=#0000ff><U><A href="http://en.wikipedia.org/wiki/HVDC" target=_blank>High Voltage Direct Current</A></U></FONT> (HVDC) technology an average of 1500 miles. Generating 10 GW of energy will require about 50 square miles of dessert for the solar array and cost about $20B. The HVDC equipment and lines to transport 10 GW of energy 1500 miles is about $5B for a total cost per 10 GW module of $25B. Ultimately, to provide an additional 90 GW of additional peak power would require nine such modules for a total cost of $225B, a large number to be sure.</P> <P class=western style="MARGIN-TOP: 0.08in">We then need to ask how we would pay for this investment, and that takes us to the hard-dollar savings it will generate. As mentioned above, 42% of our 21M barrel daily usage is for our current LDV fleet. Oil to support these vehicles at $100 per barrel is costing us $882M per day, or $27B per month. Since eliminating 42% of our oil consumption would eliminate our need for Middle East oil, we would no longer need to be there and we could save the $10B we currently spend monthly protecting our “strategic oil interests” we would no longer have. We then subtract from these monthly savings the cost of driving EVs every month. To get this number we take the 2.6 trillion miles driven annually and divide by the average of 5 miles per kwh, multiply by the 10 cent average cost of a kwh and divide by 12. The result is $4.33B dollars per month. This works out to a total of $32.7B in savings per month which means our investment of $225B would be paid for in less than 8 months!</P> <P class=western style="MARGIN-TOP: 0.08in"><B>A More Detailed Analysis</B></P> <P class=western style="MARGIN-TOP: 0.08in">The results above are interesting and you can imagine how profitable this investment would be after we repaid the initial capital. And this analysis is conservative since I did not include savings on the oil changes, tune-ups, and emission checks that EVs don’t need, not to mention saving the time it takes to stop at gas stations periodically and waiting in gas lines as we slide down the peak oil curve. Also not included in the analysis are the other benefits including: revenues from exporting our solar generated energy to countries like Canada that have no solar furnace, and exporting our technology to countries like Mexico, China, and many European countries that do. Then there are the hard to quantify but very valuable benefits of removing oil from the foreign policy agendas of the major industrialized nations and restoring the stature of our country that has been damaged over the last six years.</P> <P class=western style="MARGIN-TOP: 0.08in">As profitable as these prospects are, the numbers above are a bit unrealistic since they assume that we could deploy 200M EVs and provide the 90 GW of additional power they would need in a single step. To get a more accurate picture of how our investment would play out we need to look at a time-series analysis of costs and benefits over a five-year period. </P> <P class=western style="MARGIN-TOP: 0.08in">We’ll start with the knowledge discussed above, that we have enough excess capacity in the evenings to charge about 10-20% of our current LDV fleet as EVs. It turns out this is a very valuable state of affairs since it will provide the economic fuel to boot-strap the creation of our Electric Economy. To that, we need to add one more ingredient, and that is a government mandate that 20% of all new cars sold in this country in the first year must travel at least 40 miles without burning carbon fuels. This would allow pure electric vehicles like the <FONT color=#0000ff><U><A href="http://www.teslamotors.com/" target=_blank>Tesla Roadster</A></U></FONT> and serial hybrids like the <FONT color=#0000ff><U><A href="http://www.chevrolet.com/electriccar/?seo=goo_electric_car" target=_blank>Chevy Volt</A></U></FONT> to participate. In the second year, 40% of new cars would need to meet this standard, and likewise until at year 5, all new cars sold in this country would be emission-free. My research indicates that 20M new LDVs are sold in this country every year. So my economic model distributes these out by multiplying 20M times 20%, or 4M cars, equally divided across the twelve months of the year. The next year it does the same for 40% and so on until at the fifth year, all 20M vehicles are distributed across twelve months.</P> <P class=western style="MARGIN-TOP: 0.08in">Then we need to model gasoline savings for our new EVs that won’t be using any. To do this, taking industry statistics, we will assume that the average LDV drives 13,000 miles per year and gets an average 20 miles per gallon of gasoline that costs three-dollars per gallon. Note, as mentioned above, we will not take into account the other savings EVs experience with regard to oil changes, tune-ups and other internal combustion engine maintenance.</P> <P class=western style="MARGIN-TOP: 0.08in">But driving EVs will not be free, and we need to account for the electrical energy costs associated with that same average 13,000 miles driven. To do this we assume an EV will get 5 miles per kwh, and that kwh will cost ten cents, which means energy costs for an EV are about two-cents per mile.</P> <P class=western style="MARGIN-TOP: 0.08in">Then we need to consider the capital investment of adding electric power capacity in 10 GW modules as necessary. From above, these costs will be $20B for solar thermal generation, and $5B to transport the energy generated an average of 1500 miles, a total of $25B for each 10 GW to be added. But once we add one of these modules we will also need to maintain it and associated transmission facilities at a cost of about $54M per month.</P> <P class=western style="MARGIN-TOP: 0.08in">Lastly, we need to consider the savings associated with extracting our resources from Iraq. My model assumes that as we taper our need for Middle East oil, we taper our involvement in a region that doesn’t want us there. Specifically, I assume a gradual straight-line reduction in forces over a five-year or sixty-month period.</P> <P class=western style="MARGIN-TOP: 0.08in">Here is a graphical representation of my five-year projection. I have truncated the time line at three years since the benefits completely overwhelm the details after the full five years. Note that the vertical axis is in billions of dollars. </P> <P class=western style="MARGIN-TOP: 0.08in" align=center><IMG height=558 src="http://docs.google.com/File?id=ddp7qh8p_128d4rg8bf7" width=599 align=bottom border=0 name=graphics2></P> <P class=western style="MARGIN-TOP: 0.08in" align=center><I><B>Electric Economy Economics</B></I></P> <P class=western style="MARGIN-TOP: 0.08in"><BR><BR></P> <P class=western style="MARGIN-TOP: 0.08in">Each of the line items discussed above is represented on the graph according to the legend. The line of interest is the blue increasing “saw-tooth” that represents the cumulative gain (loss) of the investment as a function of time.</P> <P class=western style="MARGIN-TOP: 0.08in">As you can see, introducing EVs even at the modest rate of 20% of new cars in year one results in significant savings. By taking advantage of our existing excess evening power capacity, we can defer installing the first new 10 GW generation module until the beginning of year two. Notice that the savings almost pays for this additional generation capacity which is completely recouped in the next two months. After that, the savings generated during the year completely pay for the next infusion of additional power generation, each increment paying for the next. At the end of three years, our investment has netted us about $115B. As mentioned above, I have left out the last two years of analysis since they would drown out the details, but suffice it to say, at the end of five years, when we are producing nothing but EVs, our investment will have netted us $368B. </P> <P class=western style="MARGIN-TOP: 0.08in">Two issues remain: monetizing the savings so we can begin construction of the first 10 GW power module, and offsetting highway funds that will diminish as we migrate away from gasoline.</P> <P class=western style="MARGIN-TOP: 0.08in"><B>Monetizing our Savings</B></P> <P class=western style="MARGIN-TOP: 0.08in">As discussed above, the first year of gasoline savings will fund the construction of the first 10 GW generation module and these savings will accrue to the owners of EVs who are benefiting from the savings. But some of these savings need to go toward construction of power generation modules situated in the desert.</P> <P class=western style="MARGIN-TOP: 0.08in"><B>Highway Funds</B></P> <P class=western style="MARGIN-TOP: 0.08in">We currently pay 18.3 cents per gallon of gasoline for federal highway maintenance that amounts to about $26B per year. As we move off gasoline towards electric vehicles we will experience a decrease in highway funds. Unless EVs are also hovercraft they will still be using the highway system that will still need to be maintained.</P> <P class=western style="MARGIN-TOP: 0.08in"><B>Solution</B></P> <P class=western style="MARGIN-TOP: 0.08in">Moving toward an Electric Economy will require that we tax electricity one-cent per kwh which will generate $40B in revenue annually, split to fund construction of power modules and highway maintenance. The <FONT color=#0000ff><U><A href="http://www.eia.doe.gov/emeu/reps/enduse/er01_us_tab1.html" target=_blank>average household uses 10,600 kwh per year</A></U></FONT>, so a tax of one-cent per kwh will cost this average household $106 per year. The same average household has two cars, each of which travels 13,000 miles per year. With gasoline at $3.00 per gallon and the average car getting 20 mpg, that’s 15 cents per mile. Our newly added one-cent per kwh tax means that an EV that gets 5 miles per kwh will consume electricity that costs 11 cents per kwh yielding 11/5 = 2.2 cents per mile. This means the average EV will save 15-2.2 or 12.8 cents per mile or 13,000 * 0.128, approximately $1650 annually. The average household with two cars will then save $3300 per year, not to mention saving the costs of oil changes, emissions tests, etc.</P> <P class=western style="MARGIN-TOP: 0.08in">Ironically, a one-cent per kwh tax on electricity will stimulate demand for electric vehicles. Those still driving internal combustion vehicles will be paying $106 more per year for electricity without receiving any of the savings that will accrue to EV owners.</P> <P class=western style="MARGIN-TOP: 0.08in"><B>Conclusion</B></P> <P class=western style="MARGIN-TOP: 0.08in">So here’s the pitch: Would you be willing to invest $106 per year to save $3300 per year while at the same time: really defeating terrorism, putting an end to the emissions that are fouling the air we breath and the atmosphere above, establishing a new energy industry that will take us from trade deficits to trade surpluses, financially and politically neutralize Iran’s Ahmadinejad and Venezuela’s Chavez, and reestablish this country’s leadership position in the community of nations. And we can achieve this without really sacrificing anything; Americans are much better consumers than conservationists. An Electric Economy will allow us to have better cars with higher performance, much lower operating costs and all the amenities we have come to expect. Our solar furnace has the capacity to support 30 countries our size even after we phase out our coal and <FONT color=#0000ff><U><A href="http://geopoliticsofenergy.blogspot.com/2007/11/1192007-bottling-nucular-genie.html">ultimately nuclear generation</A></U></FONT> plants.</P> <P class=western style="MARGIN-TOP: 0.08in">With the 2008 elections on the horizon, we have an opportunity to find real leaders instead of just politicians. The way to get started is to mandate that 20% of our new vehicles will be “forty-mile capable” EVs beginning with the 2010 model year in 2009, exploiting our fortuitous excess off-peak electrical capacity. This will trigger our self-funding freedom from fossil fuels and those that would do us harm. Imagine the good we could accomplish both here and abroad with our new-found wealth and regained stature. I, for one, would feel much better about how we have left the <I>State of Our Union</I> to our children and theirs.</P> <P class=western style="MARGIN-TOP: 0.08in"><I>V1.6</I></P>HarleyDavehttp://www.blogger.com/profile/13596202686730076462noreply@blogger.com0tag:blogger.com,1999:blog-7798354116282031049.post-90114711431483348712007-11-09T06:25:00.000-08:002007-11-09T06:27:19.411-08:0011/9/2007 - Bottling the "Nucular" Genie<P CLASS="western" STYLE="margin-top: 0.08in">The <FONT COLOR="#0000ff"><U><A HREF="http://geopoliticsofenergy.blogspot.com/2007/09/electric-economy-facts-within-fiction_15.html">Electric Economy</A></U></FONT> will put us on a track like that described in <FONT COLOR="#0000ff"><U><A HREF="http://geopoliticsofenergy.blogspot.com/2007/10/10252007-next-internet.html">The Next Internet</A></U></FONT>, a prosperous time for those who understand the importance of clean energy technology and its export. Once on that track, it’s interesting to think about where it could lead us in the long term.</P> <P CLASS="western" STYLE="margin-top: 0.08in">Unstable Middle Eastern countries like Iran are interested in joining the brotherhood of nuclear nations—actually pronounced “nucular” according to our president. While they profess their interest is strictly for energy purposes, their threats against Israel and other saber rattling make it difficult not to believe they are interested in weapons technology as well. After all, Iran’s neighbors, like India and Pakistan, already have nuclear weapons capability making it is easy to see why Iran would want the security of having their own. Is a Middle East arms race something we must live with? Will they have the discipline to control weapons-grade materials?</P> <P CLASS="western" STYLE="margin-top: 0.08in">Robert Oppenheimer, the head of the Manhattan Project, and his collaborators who developed our nuclear capability in the 1940’s understood the dangers of what they were developing. For them, at the time, it seemed (and probably was) a case where the benefits outweighed the risks. However, many contributors to the project, including Oppenheimer, voiced their concern about “letting the nuclear energy genie out of the bottle,” foretelling future concerns.</P> <P CLASS="western" STYLE="margin-top: 0.08in">And indeed, we are now at that point. Iran argues with a straight face that their only interest in nuclear technology is for energy purposes, which seems odd coming from the country with the second largest oil reserves. Yet, if we were an unbiased third party, it would seem a logical argument. Why should some countries be allowed to have nuclear technology for energy purposes, and some not?</P> <P CLASS="western" STYLE="margin-top: 0.08in">This could be another benefit of developing our Electric Economy from solar thermal sources. We currently generate 20% of our electricity from nuclear reactors. Suppose we were to phase these out, decommission them in an orderly fashion, replacing that capacity with solar thermal generation. This would eliminate the nuclear “you have it, so can we” argument, and ultimately eliminate nuclear reactors altogether. Perhaps we could put a genie back in the bottle!</P> <P CLASS="western" STYLE="margin-top: 0.08in"><I>V1.1</I></P> <P CLASS="western" STYLE="margin-top: 0.08in"><BR><BR> </P> <P CLASS="western" STYLE="margin-top: 0.08in"><BR><BR> </P>HarleyDavehttp://www.blogger.com/profile/13596202686730076462noreply@blogger.com1tag:blogger.com,1999:blog-7798354116282031049.post-41415467952308138902007-10-25T19:43:00.000-07:002007-10-25T19:45:21.126-07:0010/25/2007 - The Next Internet<P CLASS="western" STYLE="margin-top: 0.08in">Personal Computers (PCs) and the Internet are two recent examples of disruptive technology, technology that leapfrogs the existing way of doing business. Disruptive technologies are great for the economy at large as they typically provide a boost to productivity and thus our GDP. They are even greater for investors who catch the wave early. While Internet innovations are far from depleted, it’s probably time to ask: what will be the next disruptive technology, the next Internet? I maintain it will be the <FONT COLOR="#0000ff"><U><A HREF="http://geopoliticsofenergy.blogspot.com/2007/09/electric-economy-facts-within-fiction_15.html">Electric Economy</A></U></FONT>.</P> <P CLASS="western" STYLE="margin-top: 0.08in">So what makes a technology disruptive? A technology can exist for years before something happens that makes it disruptive. That “something” tends to be an application, a “Killer Application,” that takes an existing technology from obscurity to mainstream, typically in a short period of time.</P> <P CLASS="western" STYLE="margin-top: 0.08in">Computers were in existence for a long time before they became small enough and affordable to the mass market. But even when they were affordable, and “personal,” they were mostly used by the “geeks” of the world. What was missing, and what was needed, was the KillerApp, the ingredient that takes an exciting technology to the masses, and for that reason, tends to be a consumer product with enough volume to drive the technology across the “disruptive” line.</P> <P CLASS="western" STYLE="margin-top: 0.08in">While PCs were languishing in the hands of the geeks, one of those geeks, Dan Bricklin was busy developing an application that he thought would be useful, the original spreadsheet program called VisiCalc. It turns out that not only was VisiCalc useful to Bricklin, it was the KillerApp that made PCs disruptive, and companies like Microsoft and Lotus cashed in on the volume.</P> <P CLASS="western" STYLE="margin-top: 0.08in">The Internet, originally called ARPANET, was developed by DARPA, the Defense Advanced Research Projects Agency, an agency of the federal government, in the early 1970’s. During the ‘70s and ‘80s it was used by the government and defense contractor technicians to exchange files and email using a cryptic command language. Most people never heard of the Internet, much less used it. In 1993 Marc Andreesen at the University of Illinois and a co-worker developed a program called Mosaic, a graphical user interface to access the Internet that became generically called a “Web Browser.” The Mosaic Browser, which became the Netscape Browser when Andreesen joined Netscape, became the KillerApp for the Internet. Suddenly, the masses could access this backbone network and the demand generated caused a corresponding demand for information which caused the proliferation of Web Servers much to the joy of Sun Microsystems and other server manufacturers. The increase in servers and other devices accessing the Internet created a demand for Internet switches and routers that Cisco et al. were only too happy to fill.</P> <P CLASS="western" STYLE="margin-top: 0.08in">We have had an electricity distribution system in place for many years, and over that time, eight distinct regions have evolved under the coordination of NERC, the <FONT COLOR="#0000ff"><U><A HREF="http://www.nerc.com/regional/" TARGET="_blank">North American Electric Reliability Corporation</A></U></FONT>. </P> <P CLASS="western" ALIGN=CENTER STYLE="margin-top: 0.08in"><IMG SRC="http://docs.google.com/File?id=ddp7qh8p_99g66wrnff" NAME="graphics1" ALIGN=BOTTOM WIDTH=521 HEIGHT=399 BORDER=0></P> <P CLASS="western" STYLE="margin-top: 0.08in">While the Internet is an information network, the existing NERC network is a loosely coupled electricity network of similar proportions, and the future backbone of the Electric Economy. We just need the KillerApp that will make the Electric Economy disruptive; and that application is electric vehicles.</P> <P CLASS="western" STYLE="margin-top: 0.08in">Electric vehicles are a consumer product. While they will use considerably more electrical energy than television sets and other appliances, we can begin deploying them immediately because we currently have unused electrical generation capacity in the evenings, when these vehicles would be plugged in and charging. But wide scale deployment will require significant new sources of energy, making electric vehicles the KillerApp. This energy can be provided cleanly by “energy servers” located in our 150,000 square mile solar furnace in the southwest, creating opportunities for companies that manufacture solar energy plant equipment. As Internet servers required additional routers, our energy servers will require routing of their generated electricity into the existing eight NERC regions around the country. This will provide opportunities for companies that built High Voltage Direct Current (HVDC) transmission lines.</P> <P CLASS="western" STYLE="margin-top: 0.08in">The analogies between the Internet and the Electric Economy are straightforward. Where the Internet is an information network that distributes information from servers over routers through distribution to applications like browsers and databases, the Electric Economy will distribute electricity from servers over routers through distribution to applications like toasters and electric vehicles. It remains to be seen who will be the Microsofts, Sun Micros, and Ciscos of the Electric Economy. Here we go again!</P>HarleyDavehttp://www.blogger.com/profile/13596202686730076462noreply@blogger.com0tag:blogger.com,1999:blog-7798354116282031049.post-17892025121432031202007-10-04T08:58:00.000-07:002008-04-17T13:34:26.609-07:004/17/2008 - A Carbonless Energy Strategy, Architecture and Design<P class=western id=eq6h style="MARGIN-TOP: 0.08in"><I id=dh97>Updated: 4/17/2008</I></P> <P class=western id=j6:2 style="MARGIN-TOP: 0.08in" align=center><FONT id=z5fz size=4><B id=qnzb>A Carbonless Energy Strategy, Architecture, and Design</B></FONT></P> <P class=western id=nbkm style="MARGIN-TOP: 0.08in" align=center><BR id=b:ui><BR id=q38i></P> <P class=western id=ykpb style="MARGIN-TOP: 0.08in" align=center><FONT id=pj1z size=4><B id=o9pp>David Spicer</B></FONT></P> <P class=western id=qy_k style="MARGIN-TOP: 0.08in"><B id=c-sk>Overview</B></P> <P class=western id=uain style="MARGIN-TOP: 0.08in">In a world beset with problems ranging from energy shortages, pollution, global warming, climate change, terrorism and wars purported to defeat it, one problem stands out: our addiction to burning fossil fuels for their energy content. The reason, of course, is that eliminating this addiction will make these and other issues vanish.</P> <P class=western id=h:6t style="MARGIN-TOP: 0.08in">This document proposes a strategy for achieving a national carbonless energy future. There are many “moving parts” to such a strategy but hopefully, a country as sophisticated as ours can learn to “walk and chew gum” at the same time. The goal is to publish a consistent strategy utilizing these moving parts that could be a starting point our leaders could take up. </P> <P class=western id=hv88 style="MARGIN-TOP: 0.08in">This is a working document that was initially seeded by the outline used in my novel <FONT id=in1r color=#0000ff><U id=psji><A id=bif6 href="http://geopoliticsofenergy.blogspot.com/2007/09/deadly-freedom-is-techno-thriller-based_15.html">DEADLY FREEDOM</A></U></FONT>. The first component of the strategy is an architecture for providing a carbonless energy economy. <B id=sd5b>The proposed architecture will be built out of existing technologies, </B>no “leaps of faith” or “science projects” requiring people in white lab coats will be required. I will reference the companies best positioned to provide the technologies and provide links to their products/services where appropriate. We have all the required technologies at our disposal today! The question will be cost and this is discussed in my post “<FONT id=at0- color=#0000ff><U id=t_86><A id=ngr1 href="http://geopoliticsofenergy.blogspot.com/2007/11/business-proposition-for-america.html">A Business Proposition for America</A></U></FONT>.”</P> <P class=western id=r109 style="MARGIN-TOP: 0.08in"><B id=qb5w>Architecture</B></P> <P class=western id=n9d4 style="MARGIN-TOP: 0.08in">The architecture of any energy economy has three primary components: energy sources, energy sinks (the users of the source energy), and energy distribution to connect the sinks to the sources.</P> <P class=western id=yhui style="MARGIN-TOP: 0.08in">In our current carbon-based fossil fuel environment, the vast majority of our source energy is provided by oil, coal, and natural gas, with some nuclear and some hydroelectric. Our energy sinks tend to be almost entirely carbon-based, including the cars we drive, the trucks we use for deliveries, and the furnaces we use to heat our homes and run our factories. Oil and gas distribution utilizes carbon for trucking and shipping, and all too often we spill the contents of what’s being distributed! The <FONT id=k5ms color=#0000ff><U id=db-8><A id=gznv href="http://en.wikipedia.org/wiki/Exxon_Valdez" target=_blank>Exxon Valdez</A></U></FONT> is the single most ominous example and more recently, there was the <FONT id=l-bp color=#0000ff><U id=x96o><A id=uk0_ href="http://www.foxnews.com/story/0,2933,258281,00.html" target=_blank>explosion in New York</A></U></FONT> of a train carrying propane and an <FONT id=p_b. color=#0000ff><U id=ki2_><A id=f1am href="http://www.cnn.com/2007/US/11/09/bay.spill.ap/" target=_blank>oil spill in San Francisco Bay</A></U></FONT>.</P> <P class=western id=ez41 style="MARGIN-TOP: 0.08in">By contrast, in a carbonless energy world sources, sinks, and distribution, are completely devoid of fossil fuels. But we have competing architectures that could provide a carbonless path; it comes down to a Hydrogen Economy vs. an Electric Economy (although hydrogen fuel cells can be considered just batteries, which tends to cloud some issues). The problem is that we may not have the luxury of time to build and test each solution. We need to do some analysis to pick the right path, or to do some, as Einstein called them, <I id=pyh4>gedanken,</I> or thought experiments.</P> <P class=western id=bsp7 style="MARGIN-TOP: 0.08in">In my <FONT id=qe3- color=#0000ff><U id=sm7_><A id=xscm href="http://geopoliticsofenergy.blogspot.com/2007/09/electric-economy-facts-within-fiction_15.html">overview of an Electric Economy</A></U></FONT>, I discuss hydrogen concerns, mostly in the area of handling and distribution. Before I started my research I began with the preconceived notion that the result would be “The Hydrogen Economy.” Fuel cells charged with hydrogen that produce just electricity and water when the energy is released are a very seductive technology, very futuristic. But the practicalities of the existing electrical infrastructure versus no existing infrastructure for hydrogen pulled me away.</P> <P class=western id=r4-u style="MARGIN-TOP: 0.08in"><I id=j06r><B id=ik0j>Implementing the Architecture</B></I></P> <P class=western id=ylir style="MARGIN-TOP: 0.08in">At this point I conclude that our energy source will be generating electricity; that all of our sinks, or uses of energy, will be electrically powered; and, of course, the distribution connecting these two will be based on the existing electrical grid. But we still have many choices to make and issues to contend with. </P> <P class=western id=uopu style="MARGIN-TOP: 0.08in"><I id=ekzj><U id=ufxs>Generation</U></I></P> <P class=western id=n7.l style="MARGIN-TOP: 0.08in">Clean electricity generation can come from a variety of sources including nuclear, solar, wind, and even tapping into the power of oceanic waves. We aren’t constrained to pick just one source, the answer may be in harnessing more than one to take advantage of unique characteristics. Even then we have choices. For example, solar energy can generate electricity thermally by heating water into steam to turn a turbine; or using a photovoltaic process, by converting sunlight directly into electricity—photons to electrons. Each has certain benefits over the other. My assumption at this point is that both forms of solar will be used. While photovoltaic is a good match for business and residential rooftops to offset electricity costs, solar thermal looks most promising for integration with existing electric utilities that have the embedded plant for distribution to our homes and businesses. Utilities are accustomed to dealing with steam turbines, homeowners are not. A new player in the solar thermal space is <FONT id=i2_. color=#0000ff><U id=bd2m><A id=j4hn href="http://www.ausra.com/" target=_blank>Ausra, a Palo Alto startup</A></U></FONT> that has moved from Australia to the US. The major benefit of solar thermal for utilities is the ability to store energy thermally for 24-hour operation. Ausra’s technology is unique in that it uses lower temperature steam (about 300 degrees Celsius, or 572 degrees Fahrenheit) and matching lower temperature turbines that were developed for the nuclear power industry. Storage of super-heated steam is in underground tanks at a pressure of 1200 psi. </P> <P class=western id=w1bw style="MARGIN-TOP: 0.08in" align=center><IMG id=ckih height=450 src="http://docs.google.com/File?id=ddp7qh8p_235gjcqj4g8_b" width=600 align=bottom border=0 name=graphics1></P> <P class=western id=ki4u style="MARGIN-TOP: 0.08in">Using solar thermal technology we can establish a “solar furnace” comprising 150,000 square miles of mostly unusable space in the southwest where they experience 80-100 percent of total possible sunshine. It should be noted that most of this land is <FONT id=u_ds color=#0000ff><U id=v.q1><A id=d45_ href="http://nationalatlas.gov/printable/fedlands.html#list" target=_blank>already owned by the federal government</A></U></FONT>. Since it would take 12,000 square miles to provide our entire current electrical load, this area could provide all of our energy for many generations to come, or power 12 countries our size today.</P> <P class=western id=sxwg style="MARGIN-TOP: 0.08in"><I id=pmm3><U id=og9z>Electrical Loads</U></I></P> <P class=western id=tp68 style="MARGIN-TOP: 0.08in">As for our electrical loads, our uses of energy, we can heat our homes, cook our food, run our factories, and now power our cars with clean electricity. The breakthrough for electric transportation is lithium battery technology in various forms. Lithium is the lightest metal but like anything else, there is not an unlimited supply. It would be a shame to trade oil shortages for lithium shortages. Fortunately, lithium is recyclable by companies like <FONT id=nzmt color=#0000ff><U id=yk_i><A id=a6eo href="http://www.toxco.com/" target=_blank>Toxco</A></U></FONT> who have had a patented process in place for years. In terms of deployment, electric vehicles are just now reaching the market, four such vehicles come to mind, cars from: <FONT id=rwa0 color=#0000ff><U id=p4or><A id=ls0i href="http://www.teslamotors.com/" target=_blank><I id=fmeo>Tesla Motors</I></A></U></FONT> and <FONT id=mzrt color=#0000ff><U id=u5az><A id=j3_e href="http://www.zapworld.com/electric-vehicles/electric-cars/zap-x" target=_blank><I id=pptu>ZAP</I></A></U></FONT> in the US and <FONT id=wf25 color=#0000ff><U id=uxh9><A id=qhzm href="http://www.lightningcarcompany.com/" target=_blank><I id=k-_s>Lightning Car Company</I></A></U></FONT> in the UK. Most recently, GM has announced an entry in the market called the <FONT id=xfxf color=#0000ff><U id=pf11><A id=nqo3 href="http://www.chevrolet.com/electriccar/?seo=goo_electric_car" target=_blank><I id=czez>Chevy Volt</I></A></U></FONT>. We can accelerate their introduction by mandating that a percentage of the new cars and light trucks that manufactures sell in this country must be “40 mile capable” EVs and at the end of five years, all such new vehicles must be EVs.</P> <P class=western id=gl-t style="MARGIN-TOP: 0.08in"><I id=se9s><U id=yyqt>Distribution</U></I></P> <P class=western id=rrfb style="MARGIN-TOP: 0.08in">As for distribution, the US power grid is in place and could be used as is initially. But if we are to add to its responsibilities the requirement that it distributes our energy for transportation, then we need to give serious thought to upgrades. </P> <P class=western id=g3pf style="MARGIN-TOP: 0.08in" align=center><IMG id=j2d0 height=391 src="http://docs.google.com/File?id=ddp7qh8p_236dw6v59zt_b" width=519 align=bottom border=0 name=graphics2></P> <P class=western id=ucgc style="MARGIN-TOP: 0.08in">As we tap into alternative forms of centralized electricity generation, we will need to distribute that electricity much farther than we do today. An approach to doing that is shown in the picture above. This map is from the <FONT id=c0nd color=#0000ff><U id=n_lw><A id=cay9 href="http://www.nerc.com/regional/" target=_blank>North American Electric Reliability Corporation</A></U></FONT>, NERC, the non-profit corporation chartered with the oversight and coordination of the current eight distribution regions depicted. Overlaying the NERC map I have superimposed the “solar furnace” this country is fortunate to have. Since optimal solar power is mostly concentrated in one geographic region, we need to transmit that power to each of the exiting NERC regions which can then distribute internally as they do today.</P> <P class=western id=p3my style="MARGIN-TOP: 0.08in">An appropriate technology for this distribution will be the use of high capacity <FONT id=g0w9 color=#0000ff><U id=mbln><A id=hk00 href="http://en.wikipedia.org/wiki/HVDC" target=_blank>High Voltage Direct Current</A></U></FONT> (HVDC) transmission lines as shown by the red lines in the figure above. The advantages of this technology over traditional AC transmission used within NERC regions include: </P> <OL id=obz5> <LI id=m8tt> <P class=western id=kf4w style="MARGIN-TOP: 0.08in">losses per unit of distance are about 50% those of AC, </P> <LI id=u050> <P class=western id=z87g style="MARGIN-TOP: 0.08in">Firewalling. Connecting regions with AC transmission would require synchronization of the regions.</P> <LI id=cpng> <P class=western id=vo34 style="MARGIN-TOP: 0.08in">Full use of the conductor, avoiding the “skin effect” of AC and thus lower losses for long distances.</P></LI></OL> <P class=western id=ja05 style="MARGIN-TOP: 0.08in">When daily power peaks are taken into account, my calculations for the US show that providing all of today’s 4 trillion KWH annual electricity usage would require a generating capacity of 1000 Gigawatts. If we start by eliminating the oil we use for transportation then we would need to add 100 GW of capacity that would require about 1200 square miles of thermal solar panels in the desert. Since this would need to be distributed to the eight NERC regions, I have defined a modular ”power chunk” of 10 GW as the basic unit of generation and transmission. My choice of 10 GW is somewhat arbitrary based on <FONT id=f1z3 color=#0000ff><U id=lkuz><A id=ab5h href="http://www.abb.com/cawp/gad02181/c1256d71001e0037c1256833006cb3a4.aspx?" target=_blank>the world record HVDC transmission system in Brazil</A></U></FONT>, where they transmit 6.3 GW of power about 800 kilometers. Fortunately, our full capacity does not need to be delivered day one and can evolve over time. The point is, we can have an architecture that scales well into the future. Our transmission lines would be of varying lengths, but a conservative average would be 1500 miles, with the longest lines being 2500 miles.</P> <P class=western id=o9q1 style="MARGIN-TOP: 0.08in">Then there is the issue of security. The power grid is already a national resource that needs to be protected. Adding transportation energy distribution makes it more so. We must harden this critical infrastructure from both physical attack, and as shown recently, <FONT id=cz-k color=#0000ff><U id=fgs9><A id=vbgn href="http://abcnews.go.com/Politics/wireStory?id=3657080" target=_blank>cyber attack</A></U></FONT>. Should we consider nationalizing the power grid, or at least the HVDC portion of it? As an avowed capitalist, this is difficult to fathom, but given the criticality of this resource and the need for standards and security, it’s at least worth considering!</P> <P class=western id=n.o7 style="MARGIN-TOP: 0.08in"><BR id=daba><BR id=oapz></P> <P class=western id=prao style="MARGIN-TOP: 0.08in"><B id=azyj>A 24/7 Solar Thermal System Design</B></P> <P class=western id=cfwo style="MARGIN-TOP: 0.08in">In this section I will provide a generic solar thermal system design capable of delivering 1GW of power 24 hours per day, 7 days per week. I start with the array design, then storage design. I will then use that system as the basis for building up a 10GW system and then a 100GW system<I id=p7g0>. Note that this is NOT a detailed design that would take into account such things as hourly variation in load. This is a high-level design to demonstrate feasibility. The choice of 1GW as the basic module size is driven by the economic availability of steam turbines at that size. As steam turbine technology advances, the base module size could be increased proportionately.</I></P> <P class=western id=np:- style="MARGIN-TOP: 0.08in">Assumptions: </P> <OL id=hcx5> <LI id=cybb> <P class=western id=z.xm style="MARGIN-TOP: 0.08in; MARGIN-RIGHT: 0.3in">Average solar intensity between 8 AM and 4 PM every day: 1kw/m<SUP id=i1.6>2</SUP></P> <LI id=yr6t> <P class=western id=ij8j style="MARGIN-TOP: 0.08in; MARGIN-RIGHT: 0.3in">Efficiency of solar array: 10%</P> <LI id=b9p4> <P class=western id=eo.e style="MARGIN-TOP: 0.08in; MARGIN-RIGHT: 0.3in">Thermal array output vs input water temperature in centigrade: 150</P></LI></OL> <P class=western id=cli7 style="MARGIN-TOP: 0.08in"><I id=avyu><U id=qxtf>Array Design</U></I></P> <P class=western id=dqf- style="MARGIN-TOP: 0.08in">An array that powers a system generating 1GW 24/7 needs to generate three times that, or 3GW, during the 8-hours the sun is shining.</P> <P class=western id=t7eb style="MARGIN-TOP: 0.08in" align=center><IMG id=ugsk height=65 src="http://docs.google.com/File?id=ddp7qh8p_237g62vrxf8_b" width=449 align=absMiddle name=Object1></P> <P class=western id=me_n style="MARGIN-TOP: 0.08in" align=center><BR id=ur_:><BR id=i0bd></P> <P class=western id=hetp style="MARGIN-TOP: 0.08in" align=center><IMG id=dsfp height=37 src="http://docs.google.com/File?id=ddp7qh8p_238fstjjc4x_b" width=231 align=absMiddle name=Object2></P> <P class=western id=gldp style="MARGIN-TOP: 0.08in" align=center><BR id=dz-m><BR id=i:vi></P> <P class=western id=lnkf style="MARGIN-TOP: 0.08in" align=center><IMG id=sare height=63 src="http://docs.google.com/File?id=ddp7qh8p_239fck4ksd5_b" width=315 align=absMiddle name=Object3></P> <P class=western id=fv3. style="MARGIN-TOP: 0.08in"><BR id=xt2h><BR id=c4mi></P> <P class=western id=uo4h style="MARGIN-TOP: 0.08in">So a solar thermal array of 11.5 square miles will generate 3GW of power for 8 hours per day.</P> <P class=western id=mz98 style="MARGIN-TOP: 0.08in"><I id=jyap><U id=s68a>Storage Design</U></I></P> <P class=western id=mk4z style="MARGIN-TOP: 0.08in">Since we will be relying on heated water storage for 16 hours per day and that storage must also generate 1GW for that period, we need 16GWH of water storage.</P> <P class=western id=u9x3 style="MARGIN-TOP: 0.08in">Using the specific heat of water we have the following equation:</P> <P class=western id=excb style="MARGIN-TOP: 0.08in" align=center><IMG id=m.eg height=33 src="http://docs.google.com/File?id=ddp7qh8p_240f4xt4rgg_b" width=412 align=absMiddle name=Object4></P> <P class=western id=rm5n style="MARGIN-TOP: 0.08in" align=center><BR id=j6eb><BR id=ruzt></P> <P class=western id=hube style="MARGIN-TOP: 0.08in">Where ΔT is the difference between the temperature of the water coming out of the solar array and that of the water returning to the array from the storage tank.</P> <P class=western id=hnn6 style="MARGIN-TOP: 0.08in">Since we want to find VOL in terms of Energy and Temperature, we need to solve for VOL:</P> <P class=western id=aq3c style="MARGIN-TOP: 0.08in" align=center><IMG id=k8tu height=69 src="http://docs.google.com/File?id=ddp7qh8p_241kzpkjgdx_b" width=275 align=absMiddle name=Object5></P> <P class=western id=p6co style="MARGIN-TOP: 0.08in" align=center><BR id=wfc0><BR id=lv6b></P> <P class=western id=t3aq style="MARGIN-TOP: 0.08in">But we need to cast this equation in GWH and cubic meters, not Kilojoules and liters. So to do that we must multiply the right side by the conversion factor for KJ per GWH, and divide by the conversion factor for liters per cubic meter:</P> <P class=western id=j8rz style="MARGIN-TOP: 0.08in" align=center><IMG id=ap4t height=73 src="http://docs.google.com/File?id=ddp7qh8p_24298mw68c6_b" width=362 align=absMiddle name=Object6></P> <P class=western id=ib70 style="MARGIN-TOP: 0.08in" align=center><BR id=n3qq><BR id=h-xm></P> <P class=western id=srtz style="MARGIN-TOP: 0.08in">Now plugging in 16 GHW as the required energy and 150 as the temperature differential:</P> <P class=western id=ue8: style="MARGIN-TOP: 0.08in" align=center><IMG id=i0_u height=65 src="http://docs.google.com/File?id=ddp7qh8p_243ghjgh3cg_b" width=385 align=absMiddle name=Object7></P> <P class=western id=jn6- style="MARGIN-TOP: 0.08in" align=center><BR id=y7o3><BR id=exmg></P> <P class=western id=c9ni style="MARGIN-TOP: 0.08in">So we need approximately 90,000 cubic meters of water to store 16GWH of energy. This would be a cube about 45 meters (approximately 150 feet) on a side.</P> <P class=western id=flxh style="MARGIN-TOP: 0.08in">Now we can consider constructing a 1GW solar thermal power module in the desert that would look something like the figure below.</P> <P class=western id=khbf style="MARGIN-TOP: 0.08in" align=center><IMG id=t0l6 height=424 src="http://docs.google.com/File?id=ddp7qh8p_244dbqdrjhr_b" width=400 align=bottom border=0 name=graphics3></P> <P class=western id=jmyj style="MARGIN-TOP: 0.08in">Here we have the solar array laid out in a square 3.5 miles on a side. All of the heated water in the receiver tubes depicted by the heavy black lines is dumped into the storage tank and used to run a standard steam turbine that generates 1GW of power.</P> <P class=western id=y7sf style="MARGIN-TOP: 0.08in">By combining ten of these 1GW modules we can construct a 10GW module as shown below.</P> <P class=western id=owyb style="MARGIN-TOP: 0.08in"><BR id=pohd><BR id=gz.7></P> <P class=western id=uqsz style="MARGIN-TOP: 0.08in" align=center><IMG id=vwp1 height=227 src="http://docs.google.com/File?id=ddp7qh8p_245dm446d39_b" width=600 align=bottom border=0 name=graphics4></P> <P class=western id=xm6c style="MARGIN-TOP: 0.08in">Now we have the ten individual 1GW outputs running to a 10GW bus leading to an HVDC converter allowing power to be transmitted in DC form from this point on. This 10GW module would provide enough energy to charge 10 percent of our light duty vehicle fleet.</P> <P class=western id=d7t8 style="MARGIN-TOP: 0.08in">The last step is to grow multiple 10GW modules into a 100GW module that would be sufficient to power all of our light duty vehicles when they become EVs.</P> <P class=western id=ygrt style="MARGIN-TOP: 0.08in" align=center><IMG id=zmr0 height=418 src="http://docs.google.com/File?id=ddp7qh8p_246fnt5mvcf_b" width=383 align=bottom border=0 name=graphics5></P> <P class=western id=h_mn style="MARGIN-TOP: 0.08in">When viewed from space, this configuration might look something like an integrated circuit! However, this 100GW array would be a square of desert taking up approximately 35 miles on a side, or 1225 square miles. All the individual HVDC lines from the 10 10GW sub-modules would be collected in the HVDC Distribution center and routed from there to the existing NERC regions. Of course we could continue to deploy ten more of these 100GW modules to provide all of our energy in this fashion. </P> <P class=western id=ge6d style="MARGIN-TOP: 0.08in"><I id=u85g><B id=t03a>Economics</B></I></P> <P class=western id=l_of style="MARGIN-TOP: 0.08in">Needless to say, adding 100 GW of clean electricity generation to our infrastructure will be an expensive proposition. But as I discuss in “<FONT id=obf: color=#0000ff><U id=wz7f><A id=rnyy href="http://geopoliticsofenergy.blogspot.com/2007/11/business-proposition-for-america.html">A Business Proposition for America</A></U></FONT>,” these costs will be quickly offset by the hard-dollar savings generated as we wean ourselves off oil. Beyond that, the establishment of an Electrical Economy can stimulate our economic growth as discussed in “<FONT id=f2_5 color=#0000ff><U id=u.ng><A id=j5.l href="http://geopoliticsofenergy.blogspot.com/2007/10/10252007-next-internet.html">The Next Internet</A></U></FONT>.”</P> HarleyDavehttp://www.blogger.com/profile/13596202686730076462noreply@blogger.com0