Fuel Freedom: Ending oil addiction
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Transcript of Fuel Freedom: Ending oil addiction
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Ending Oil Addiction
Fuel Freedom Foundation, September 2011
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“Genie, for my third and final wish, I want to own all the gold in the world! ...”
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$7T
World Gold
Money and Power:How much is too
much?What? …
… That’s it?
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$7T
World Gold
Money and Power:How much is too
much? Yes, it is only 7 trillion dollars. You should have asked for all the money in all the banks in the world. .
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$7T
World Gold
Money and Power:How much is too
much? Yes, it is only 7 trillion dollars. You should have asked for all the money in all the banks in the world. .
$14T
All Bank Deposits
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$7T
World Gold
Money and Power:How much is too
much?
$14T
All Bank Deposits
That still does not seem like much. How about owning the shares of all the public companies?
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$7T
World Gold
Money and Power:How much is too
much?
$14T
All Bank Deposits
That still does not seem like much. How about owning the shares of all the public companies?
$58T
Global Market Cap of Listed
Co.
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$7T
World Gold
Money and Power:How much is too
much?
$14T
All Bank Deposits
$58T
Global Market Cap of Listed
Co.
You know what’s funny? If you really want to own something, you should have chosen to be the owner of all the debt from every government in the world. (Although I am not sure what it would really be worth…)
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$7T
World Gold
Money and Power:How much is too
much?
$14T
All Bank Deposits
$58T
Global Market Cap of Listed
Co.
$102T
World Gov. Debt
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$7T
World Gold
Money and Power:How much is too
much?
$14T
All Bank Deposits
$58T
Global Market Cap of Listed
Co.
$102T
World Gov. Debt
Genie, Is that the most anyone can
own?
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$7T
World Gold
Money and Power:How much is too
much?
$14T
All Bank Deposits
$58T
Global Market Cap of Listed
Co.
$102T
World Gov. Debt
Not even close. There is one thing that is worth more than all
the financial instruments in the world. WORLD OIL
RESERVES!
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$7T
World Gold
Money and Power:How much is too
much?
$14T
All Bank Deposits
$58T
Global Market Cap of Listed
Co.
$102T
World Gov. Debt
$102T
World Oil Reserves
$132,000,000,000,000
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$7T
World Gold
Money and Power:How much is too
much?
$14T
All Bank Deposits
$58T
Global Market Cap of Listed
Co.
$102T
World Gov. Debt
$102T
World Oil Reserves
$132,000,000,000,000
Oh My...
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The sober realization…
There simply isn’t enough money in the world to buy all the oil.
Which means that…Oil is ALREADY too expensive and is literally bankrupting us
How did we get to this point?
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Strategic Commodity: What’s in your wallet?
Petroleum has a monopoly on transportation fuel
Transportation is the driver of world commerce
World commerce is the driver of the global economy
Conclusion: Petroleum has a monopoly on the global economy
When you have a monopoly on the global economy you can name your price!
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US Energy Primer
Everything you need to know about US energy use at a glance…
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US Energy Flow – Cost, Sources and Use, 2010
Cost 70%
21%
4%
4%
Natural GasCost: ~$150B
Coal: ~$30BRenewables & Nuclear ~$30B
Imported Petroleum
Cost: ~$300B
BiofuelsCost:~$5B
Domestic Petroleum
Cost: ~$200BTransportationCost: $370B
IndustrialCost: $165B
Residential & Commercial
$80B
Electric PowerCost: $101B
Cost52%
23%
11%
14%
Supply Sources Demand Sectors
Data from the Dept. of Energy
Transportation is our most fuel
intensive sector with 52% of the
cost
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US Energy Flow – Cost, Sources and Use, 2010
Cost 70%
21%
4%
4%
Natural GasCost: ~$150B
Coal: ~$30BRenewables & Nuclear ~$30B
Imported Petroleum
Cost: ~$300B
BiofuelsCost:~$5B
Domestic Petroleum
Cost: ~$200BTransportationCost: $370B
IndustrialCost: $165B
Residential & Commercial
$80B
Electric PowerCost: $101B
Cost52%
23%
11%
14%
Supply Sources Demand Sectors
Data from the Dept. of Energy
Oil is used mostly for transportation. Only 1% is used to
generate electricity.
1%
72%
94%
3%
1% 3%
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US Energy Flow – Cost, Sources and Use, 2010
Cost 70%
21%
4%
4%
Natural GasCost: ~$150B
Coal: ~$30BRenewables & Nuclear ~$30B
Imported Petroleum
Cost: ~$300B
BiofuelsCost:~$5B
Domestic Petroleum
Cost: ~$200BTransportationCost: $370B
IndustrialCost: $165B
Residential & Commercial
$80B
Electric PowerCost: $101B
Cost52%
23%
11%
14%
Supply Sources Demand Sectors
Data from the Dept. of Energy
1%
72%
94%
3%
1% 3%
Transportation uses oil almost
exclusively!
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US Energy Flow – Cost, Sources and Use, 2010
Cost 70%
21%
4%
4%
Natural GasCost: ~$150B
Coal: ~$30BRenewables & Nuclear ~$30B
Imported Petroleum
Cost: ~$300B
BiofuelsCost:~$5B
Domestic Petroleum
Cost: ~$200BTransportationCost: $370B
IndustrialCost: $165B
Residential & Commercial
$80B
Electric PowerCost: $101B
Cost52%
23%
11%
14%
Supply Sources Demand Sectors
Data from the Dept. of Energy
1%
72%
94%
3%
1% 3%
48%
33%
Coal, nuclear and renewables, a mere 8% of our
national fuel budget, generate
81% of our electricity.
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US Energy Flow – Cost, Sources and Use, 2010
Cost 70%
21%
4%
4%
Natural GasCost: ~$150B
Coal: ~$30BRenewables & Nuclear ~$30B
Imported Petroleum
Cost: ~$300B
BiofuelsCost:~$5B
Domestic Petroleum
Cost: ~$200BTransportationCost: $370B
IndustrialCost: $165B
Residential & Commercial
$80B
Electric PowerCost: $101B
Cost52%
23%
11%
14%
Supply Sources Demand Sectors
Data from the Dept. of Energy
1%
72%
94%
3%
1% 3%
48%
33%
In other words, our energy problem is petroleum-for-
transportation, NOT coal-for-electricity
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What should we do?
On the red corner we have the “Drill Baby Drill” and nuclear energy
On the blue corner we have the global warming with solar and wind
Who is right?
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Future oil price: How fast can the Drill Baby Drill?
New mass urbanization in China is driving oil demand at a breakneck pace
But new oil is harder to find, takes longer to develop and requires a lot more capital
Even with the current record level of domestic drilling oil is still too expensiveDrilling is like trying to outrun a
bullet train with a bicycleIt buys us time but it is NOT the
solution!
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Not really… There may be a 1,000 years of oil
supply at $1,000 a barrel
The question is how much oil is there
at $50 a barrel ? $50 a barrel is equal to gasoline at
$2.50 per gallon and to the current cost of gasoline alternatives
Peak oil: Are we running out of oil?
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Global Warming: Choose Your Poison…
PETROLEUM Use: transportation Direct cost: ~$500
billion Greenhouse: #1 emitter Urban pollution: #1 Substitutions: cheap Production: 60% import Supply risk: high Out of control pricing:
This decade
COAL Use: electricity Direct cost: ~$30
billion Greenhouse : #2
emitter Urban pollution: >#2 Substitutions: expensive Production: 0% import Supply risk: very low
In 200 yearsWhy are we focusing so much
on coal?
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Alternative Energy: Nuke’em, Nuke’em All!
Nuclear power generates clean electricity
It is a replacement for coal, not for oil Solar power generates clean
electricityIt is a replacement for coal, not
for oil Wind power generates clean
electricityIt is a replacement for coal, not
for oil
So why again are we focusing almost exclusively on coal?
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Well then…
If the red corner doesn’t get it……and the blue corner doesn’t get it…
… What do we do?
We need to break oil’s monopoly on transportation…
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Fuel Choice: Four Main Alternatives
Ethanol
Natural Gas
Electricity
Methanol
Algae
Algae
Biomass
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Four Alternatives to Gasoline
All are domestically produced All generate American jobs All emit less greenhouse gases And… all are less expensive than gasoline
So how come the price signal fails to change the market?
Remember oil’s monopoly on transportation?
Turns out there is more than one monopoly…
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Three Interconnected Monopolies
Petroleum Only Cars
Emissions Regulation
s
Gas Stations’Exclusive
Relationship with Big
Oil
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Solution: Break the 3 monopolies
Open the Car
to Other Fuels
Fuel Supply Competitio
n
Simplify Emissions Regulatio
ns
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Open the Car Platform to Fuel Competition
Require new cars to be GEM (Gasoline, Ethanol, Methanol) flexible fuel known as Open Fuel Standard
Continue the support structure for early adopters of plug-in hybrids and electric cars
Encourage fleets and long distance haulers to convert to Compressed Natural Gas or methanol
Remove regulatory barriers for increased fuel efficiency
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Fuel Supply Competition
Require oil companies to buy all types of American fuels, rather than paying them to add ethanol
Use legal action to break the fuel supply collusion
√ Phase out tariff on imported ethanol
Remove regulatory barriers for a national methanol industry (from natural gas)
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Break the Regulatory Gridlock
Update EPA regulations and vehicle warranty rules to allow Use of various fuel combinations and
CNG Use of aftermarket conversion kits Use of locally produced fuels Use of aftermarket fuel efficiency
accessories
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Wait….
What about electric cars?
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Electric Cars: The long road ahead
Electric cars are the long-term solution
Battery production ramp-up time can be as long as 20 years
What is the chance of major oil shocks within the next 20 years?
We need interim solutions in the form of alternative liquid fuels
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But….
Don’t we run into the issue of food vs. fuel?
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Food vs. Fuel: Where is the Correlation?
Jun-05
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Monthly ethanol production (1k bbls) (left axis) Crude Oil (petroleum) - Monthly PriceMaize (corn) - Monthly Price per ton
From 2005 to the middle of 2008 it
seemed that there was a correlation between ethanol
production and corn price
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Food vs. Fuel: Where is the Correlation?
Jun-05
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Monthly ethanol production (1k bbls) (left axis) Crude Oil (petroleum) - Monthly PriceMaize (corn) - Monthly Price per ton
All the while ethanol production
continued to increase
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Food vs. Fuel: Where is the Correlation?
Jun-05
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Monthly ethanol production (1k bbls) (left axis) Crude Oil (petroleum) - Monthly PriceMaize (corn) - Monthly Price per ton
However, this correlation was a mirage - once oil price collapsed so
did the price of corn
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Food vs. Fuel: Where is the Correlation?
Jun-05
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Monthly ethanol production (1k bbls) (left axis) Crude Oil (petroleum) - Monthly PriceMaize (corn) - Monthly Price per ton
A recent World Bank study showed that energy cost is the largest variable in
farming, therefore the price of food tends to
fluctuate with the price of oil
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Remove barriers for competition! We are not advocating for ethanol or methanol We are not advocating for electric cars We are not advocating for CNG We know we need reliable domestic oil
production But… More than anything, we need to open the fuel
market to competition Competition will free the American innovative
spirit to find better, cheaper, less polluting solutions
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It is the oil stupid!
Doing nothing could: Bring $200 oil and the specter of the Greater
Depression Trigger a global resource warfare
Reducing our oil burden by half while switching to American fuels would: Save the US consumers over $4 trillion a
decade Increase US global competitiveness Increase GDP growth by an extra 1% a year Free 15%-30% of the US defense budget
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Join us in forming a national effort on the scale
of the anti-smoking and global warming campaigns
to End Oil Addiction
We are not ready to write America off !
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Take the Pledge
“I pledge that my next car will be a Fuel Freedom Car
capable of running on something other than
petroleum”
FuelFreedom.org