Component of the Act

Method and Expected Effects

Component 1: Market Signal

Capping imports,
guaranteeing investments

North American
sources allowed

December 31, 2017:
Energy Independence Day?

Method

At present the U.S. imports about 12.3 million barrels of oil per day[i].  The EIA will make of the US a “safe” economy for alternative energy investors by placing a cap on these imports.  Terms of the cap are as follows:

• The cap goes into effect six months after passage of the bill
• The cap begins at the level of current consumption, again: about 12.3 million barrels of oil / day
• The cap automatically decreases once every six months thereafter by 500,000 barrels of oil per day
• By the previous three points, the act provides 1 year after its passage before its cap meaningfully decreases permissible oil imports - providing time for companies and investors to build domestic liquid energy capacity
• The automatic cap decrease continues until such a time as all oil imports can be made exclusively from North American sources (Canada and Mexico) – approximately 3.45 million barrels of oil / day using current consumption and supply values[ii]

If the EIA is signed into law on June 30, 2008, the following table delineates the path to “Energy Independence Day”.  Using current consumption and supply values, that day can be December 31, 2017:

Component of the Act

Method and Expected Effects

Component 1: Market Signal (Continued from previous page)

No shock effect

US: A global investment magnet

Increased private research

Local economic activity

Lower gasoline prices

Investment of American petrodollars, locally in the US




Global stability through
US self-confidence

Expected Effects

Opponents of this act will of course complain that the cap on oil imports will negatively impact the economy.  Some can probably be counted on to exaggerate these complaints with alarmist rhetoric.  Actually, we should expect that the cap will have an opposite effect and be a positive boon to the US economy by way of the following often reciprocally magnifying effects (see also the attached diagram):

1. No shock will occur on passage because the act provides a year of petroleum imports at current levels – plenty of time for investors and consumers to be convinced that new supplies will materialize
   
   
2. Billions of dollars are available throughout the world whose owners seek promising investments; this act tells investors where they can safely put their money: the cap immediately states that there will be a guaranteed demand in the US for domestically produced liquid fuel and provides a year to build up capacity to address the new demand; we can expect that hundreds of millions and probably billions of investment dollars will pour into the US during the initial period to grow this capacity – most likely this capacity will be from coal liquefaction but it may also come from oil shale and biomass liquefaction or other alternatives
   
   
3. Private investment dollars will pour into domestic research in improved technical methodologies for energy liquefaction
   
   
4. The domestic economy will experience a boon as activity revs up around deployment of liquefaction facilities and the sale and distribution of new liquid fuel supplies
   
   
5. The global commodities price of petroleum should decrease because of (a) the low ($40/barrel) price of current liquefaction technology, (b) the increase in net global supply through availability of new domestic alternatives and (c) the decrease in US demand for foreign supplies
   
   
6. American petrodollars, now sent overseas by  the billions daily and which often serve to enrich enemies or opponents, will increasingly be redirected at domestic producers, revving up the domestic economy and promoting the value of the dollar by reducing the trade deficit
   
   
7. The effect of the act’s passage will actually be the opposite of a “shock” that its opponents will predict; the greater source of insecurity the world over is US energy dependence;  a self-confident US, making a legally binding commitment to break with its addiction, will promote confidence locally and merit respect abroad that will translate into increased stability

Component of the Act

Method and Expected Effects

Component 2: Massive investment in renewable energy

Because children’s lives
are not abstractions, they
are flesh and blood

A finite number

$150 billion to convert
to wind and solar

Coal-burning facilities
put to bed

Coal (& other) for transportation
Solar and wind for the grid

Lower greenhouse
gas emissions

Drawbacks of coal
liquefaction mitigated

A Matter of Conscience

Present spending and projections for the war in Iraq cavalierly envision employing today’s children to fight to sustain the petroleum supply chain from the Middle East.  We must not allow that this be Our Children’s Children’s War[iii].  Our consciences require that we show ourselves willing to spend national treasure to assure that if our children are called upon to fight when they are adults, that they are called upon to fight for our values, not our lifestyle. 

Method

Whatever their cost, a finite number of solar cells and electric windmill generators is sufficient to provide for all of the US’s non-transportation energy consumption needs and with the proliferation of plug-in, hybrid electric vehicles, they will provide for transportation as well.

The Iraq war is estimated to have cost $483 billion to date.  The EIA will commit $150 billion in grants, rebates and credits to encourage or provide for energy providers to lay down massive networks of solar and wind energy farms, replacing coal-fired facilities.  As much as $50 billion of this amount will be earmarked for domestic research on increasing the efficiency of wind and solar energy production and distribution as well as environmentally safe, cleaner means of liquid energy production.

Expected Effects

This investment will strategically re-orient the country to convert the coal-based electric grid to one which is solar and wind based, while shifting coal and other raw material resources to liquefaction. 

The elimination of coal-burning power plants and their replacement with solar and wind energy farms will have a massive, cleaning effect on the environment and should more than compensate for US commitments to global efforts to reduce greenhouse gas emissions.

From an automotive perspective, use of coal and other sources for liquid fuel production may be a net-zero in terms of environmentally damaging emissions and may even have a temporary negative impact on mercury pollution.  Nevertheless, it will at a minimum be a major step in the right direction because solar and wind farms will replace coal-fired power plants.  Increased use of plug-in hybrids powered by off-peak idle energy will effectively decrease transportation-based emissions (see component 3).  Also, monies committed to research should result in technologies to create fuel using liquefaction that do not result in meaningful pollution of any kind.

Component of the Act

Method and Expected Effects

Component 3: Investment in Plug-in Hybrids

Optional?

$150 billion for
plug-in hybrids

Manufacturer investments

Consumer change

This is the only component of the act which may be considered “optional”.  It is reasonable to expect that if passed with only components 1 and 2, that energy independence will be achieved.  Nevertheless, considering the stakes, this last component would provide an ample “hedge” should progress falter on either of the other two components.

Method

The EIA will commit $150 billion in grants, credits and rebates for (a) research into the development of plug-in hybrid vehicles, (b) the creation of production and distribution capacity for these vehicles and (c) their final purchase by consumers.

Boeing or Lockheed-Martin are aircraft manufacturers whose national security role has long been understood.  This component recognizes the similar national security role played by the nation’s automobile manufactures and provides the means for those manufacturers to carry out their duties within that role.

Expected Effect

Manufacturers will discontinue futile and unwholesome resistance to stricter CAFE standards which themselves should become moot.  Instead they will commit to research into energy efficient vehicles and their eventual production and distribution.

Consumers will see benefits in terms of vehicles achieving 75, 100 or more miles to the gallon made possible by off-peak use of idle electric grid capacity.  These new vehicles will be available for purchase at a great discount by way of an aggressive, generous tax credit that will encourage consumers to expeditiously replace the current, inefficient American automotive fleet.