New information on energy....

Today’s post: Wednesday, 9-17-2008

Some information on energy that I read today may be accurate at last in part and if so is likely quite important.

A. A free email newsletter that I subscribe to is mostly for entrepreneurs and people who would like to do online information marketing or simply manage to have more money. And, this newsletter also has good articles on health and on managing or working well in companies.

It’s called Early to Rise. And, you can see today’s issue or subscribe to it yourself if you like at www.earlytorise.com .

As you might imagine, they make their money by selling information products or allowing other information marketers to advertise on their website and newsletter.

The very first item today was an ad:

"What George Bush Was Told Behind Closed Doors…Could Make You Very Rich
Special Report: Make Enormous Gains Before Wall Street Wakes Up to the "Oil Hoax" "

The first sentence sounded so dreadful, I almost skipped reading the rest of the teaser copy. But the next sentence and those that followed caught my eye.

It seems the investment letter writer who is advertising is willing to explain what he sees as some of the more important and little known aspects of the world energy situation that will cause some investments to go up dramatically. Of course, you have to pay him to find out what stocks he’s found that this information suggests may do unusually well.

I found some of what he had to say worth reading. Some of it I think he has right. Some of it will be correct but not for very long. And some of it may not be correct.

That said, I thought it worth bringing some of his comments to your attention.

1. The “oil hoax” he speaks of is NOT that people are being oversold that oil will run out. It’s that oil may be running out much faster than many people have been led to believe it will.

It seems that the Saudis and other members of OPEC have very possibly inflated their real oil reserves that they claim to have to increase the share of the OPEC oil they can pump & deliver. Or, as other members do this, they do it also to avoid having their share shrink. This is the “oil hoax” he speaks of.

In 1979 when ARAMCO left, his article says they said that Saudi Arabia had 110 billion barrels of proven oil reserves. Between then and 17 years later, the Saudis have extracted 46 billion barrels. So, if the 110 reserve figure was accurate, they would have about 64 billion barrels left.

And, he states they have found no new oil fields between then and now. But they claim to now have 260 billion barrels of reserves.

Did they hire someone with better technology to better survey their known reserves and find that much more oil? Did the increase in oil prices allow for more complete extraction, albeit using more expensive methods? Was new extraction technology developed?

If so, maybe they do still have 260 billion barrels of oil left. But because they had an incentive to claim more and did not add any few oilfields, the writer’s point is that they might only have the 64 billion barrels of oil left.

If that’s so & oil consumption per year goes up somewhat, they might only have 20 years of supply left.

This author doesn’t seem to know anything about renewable energy. But some of his other ideas that follow may have some validity.

The first thing that strikes me is that if any of the executives of the major oil companies believe this information might be accurate, it would certainly explain them spending a lot or money to get the politicians willing to do so to support a lot more offshore drilling for oil in the United States.

He makes a lot of other points that he believes follow from this first point.

2. He says that Europeans have developed efficient and clean burning and quiet diesel engines. He says that the remaining particulate pollution from such engines can be eliminated by a new technology that removes them from the exhaust pipe or tailpipe of the engine.

And, he believes that this kind of diesel in a diesel hybrid car may be the winning technology in energy efficient new cars.

He then goes on to say that coal can be used as a feedstock to make diesel fuel in a nonpolluting way.

Those ideas might be partly accurate. If they are, the company or companies that make and sell the new “tailpipe” pollution removers for such diesel engines would indeed do very well as might his clients who bought the stock of the company that developed the technology.

He also suggest that this “clean coal” use of coal will make the prices of coal and the stock of competent coal extracting companies go up if it’s used on as large a scale as he anticipates for these reasons.

3. He also believes that natural gas prices will go up dramatically from here and that natural gas is undervalued now so the percentage gains could be quite large. And the stocks that are pure plays in extracting natural gas, delivering it by pipeline, and those of companies that are LNG, Liquefied Natural Gas, related will all do well.

If this is thought to be accurate by oil company executives, it would also explain their interest in more offshore drilling as some of the prospective new areas in which to drill offshore, according this writer, have huge natural gas deposits.

He also says that such a run up in natural gas prices might well induce parts of the world that now flare off the natural gas that is to them a byproduct of their oil fields to instead build LNG plants and transport that natural gas to market. (That would also eliminate some CO2 release that is now happening on a large scale that has no economic value to even partially justify it.)

4. He also says that South Korea, much of Western Europe, & China are all rapidly developing new nuclear plants to generate electricity. (He doesn’t say so. But I’ve read that India also plans to do this & that Saudi Arabia and other middle-eastern countries may also do so.)

If that is true, and it does look to be true, based on the news I’ve seen, it may be good news for global warming as these plants may replace coal burning plants that would have been built or that now are burning coal.

But it has three other implications. One is that, although the existing nuclear facilities in these countries have not been raided so far as is known, by terrorists interested in making bombs, the potential for that might be growing on a worldwide basis.

And, even if they do not now exist in the United States, the companies that will build the components for these nuclear plants clearly exist or will be built elsewhere.

This suggests that the more nuclear plants may yet be built here.

B. I have several comments.

Since the upside potential of solar photovoltaics and solar thermal power is so huge, and is now cost competitive with coal and natural gas or very soon will be, this information suggest that it is even more important than we believed to start building more solar power generating sources both on individual buildings and as large solar power “farms” – and to begin immediately and continue until we have a huge amount of electricity flowing from solar sources.

If this is done, and many more nuclear electricity generating plants are built also, or the new natural gas source T Boone Pickens says is coming on line does do so, this may greatly soften the demand for natural gas and coal that the author of this piece now predicts. But if he is right in the short run, it will help us boost the use of solar as solar will clearly be cost competitive or even cheaper to build and operate than natural gas or coal burning plants.

However, if oil does begin to run out that soon, and liquefied coal diesel and biodiesel from algae do come online, both those kinds of businesses and the companies that make the diesel engines & pollution removal technology he describes may do well as he suggests.

His information also suggests that it might well pay us, economically & for the safety of our economy to do both the additional oil drilling and new nuclear plants the Republicans want AND the dramatic expansion of renewable energy the Democrats want to happen.

Since the renewable energy has the largest upside, is best for slowing global warming, and is safest to deploy, I still believe that Obama is by far the better choice for President.

But it also looks as if we need to address & use these other technologies this author describes; allow some more drilling for oil and natural gas in the short run & consider building more nuclear plants here.

And, whether we build more nuclear plants in the United States or not, we need to find out what we can do to ensure the safety of those that apparently are being build and will be built in the rest of the world.