Thursday, April 24 at 11 a.m. ET

'Gusher of Lies'

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Robert Bryce
Author, "Gusher of Lies: The Dangerous Delusions of 'Energy Independence' "
Thursday, April 24, 2008; 11:00 AM

Energy Tribune managing editor Robert Bryce, author "Gusher of Lies: The Dangerous Delusions of 'Energy Independence'," will be online Thursday, April 24 at 11 a.m. ET to explain why energy independence, renewable energy and biofuels appeal to voters but can't meet America's growing energy demand.

A transcript follows.

Bryce is the author of two other books -- "Cronies: Oil, the Bushes, and The Rise of Texas, America's Superstate" and "Pipe Dreams: Greed, Ego, and the Death of Enron." His articles have appeared in dozens of publications including Atlantic Monthly, Slate, New York Times, The Washington Post, The Nation and The Guardian.

Find more discussions from this series.

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Robert Bryce: Hi. I'm online.

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Burbank, Calif..: What are some of the lessons we should learn from the demise of Enron? Do you see other companies responding to these lessons and taking appropriate actions?

Robert Bryce: I've been thinking a lot about Enron lately. The hardest lesson -- and also the biggest challenge -- is that financial engineers seem to always stay 2 or 3 steps ahead of the regulators. That's the issue at hand with the subprime mess. The bankers/financial engineers created such incredibly complicated systems that no one could really understand them. The same thing happened at Enron. The issue now for regulators is: how do we properly regulate the financial markets without killing them. When I wrote Pipe Dreams I wondered if the repeal of Glass-Steagall Act was a mistake. In hindsight, it may have been.

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Arlington, Va.: In my mind there is no question that the current American way of life is not sustainable. However, there are a lot of current technologies/practices that could drastically reduce the amount of energy needed to live our lives (end-use efficiency, energy transmission efficiency, smart growth, distributed generation, etc.). If these could be implemented, wouldn't that bring us much closer to being able to satisfy our energy demands with renewables?

Robert Bryce: You are right. Many new technologies are being developed. And they may soon become economic because the prices of fossil fuels are rising. In that regard, high prices are good. There is no single solution to our energy needs. We need to look at all of them. To my mind, that includes nuclear, efficiency, more use of natural gas, solar, and more than any of those, we need breakthroughs in batteries.

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Rockville, Md.: Did anyone ever write or say we need 100 percent of our imported oil to be replaced by local sources? Or is it possible that a 10 or 20 percent reduction would have a significant impact on the world market? If not that, what percent is needed?

Robert Bryce: The problem with the current energy discussion in the US is the repeated call for energy independence. America could reduce its oil imports, but any reduction by the US would quickly be purchased by other buyers. According to the EIA, there are 173 countries or territories (out of 204 that the EIA tracks) which are net oil importers. Even if the US purchased less oil, be it 10 percent or 3 percent, there are 172 other buyers out there who will still be buying oil on the open market. And they will buy it from the lowest cost producers. That's the main fallacy of these arguments put forward by groups like Set America Free: that the US can somehow opt out of the oil market and that by doing so, the US will deny funds to certain petrostates. That argument cannot withstand even the most cursory analysis.

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Los Angeles: How much energy does it take to develop biofuels, and how much different is this than the energy it takes to develop oil and gas? I ask because isn't one part of the problem that biofuels are not the quick solution that some think there is to our energy demand because they forget that is also takes energy to develop biofuels, so there is more of a marginal saving than the "face value" saving of switching from source to another?

Robert Bryce: The energy return on energy invested with regard to biofuels is a complicated issue. According to the USDA, the return is slightly better than 1 to 1. That is, for each Btu invested, you get about 1.34 Btus back. But much of their accounting depends on the credits they take for counting byproducts (mainly DDG) that are produced during the ethanol production process. Without that credit, the return falls dramatically, so that for each Btu invested yields just 1.09 Btus. I've written a good deal on this issue. And while its important, I think the bigger issue these days is the deleterious effect biofuels are having on the food markets.

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Mt. Lebanon, Pa.: Hello. Your latest book, of which four copies are held by the Carnegie Library of Pittsburgh, are in big demand. There are five people ahead me before I get to pour over it. I'm a stickler for details (where the devil resides); I hope you don't disappoint.

That said, I'm a registered electrical engineer, electrical power and controls. That means I can hang my own shingle out and practice, and in fact, I am in private practice.

I can't count the situations where I've had to explain to a disconnected and largely uninterested population about the growing problems (physical, engineering, operations, legal) with energy supply, storage, and distribution. My own field is electricity but we all start from the same base: hydrocarbons (oil, natural gas).

Does your new book outline any of these problems educating a largely tuned-out citizenry in the limits that Mother Nature imposes on us to achieve our growing consumption of all energy sources?

And have you attempted to point out in on an energy equivalent basis what it would take to displace (for example) a cubic mile of crude oil in terms of other energy sources (solar, wind, biomass, geothermal)?

By this I mean in actually, installed, working, power plants sourced by these alternatives and connected to our transmission and distribution systems. When reduced to an accurate oil equivalent comparison, the number of plants required to produce the same energy output is staggering.

As Mother Nature continually reminds us: "There ain't no such thing as a free lunch." And she doesn't give credit.

I would appreciate a detailed treatment towards my implications, should you feel so inclined.

Thanks much.

Robert Bryce: Hi.
It appears your library needs to buy some more copies! You are right about the general public's lack of understanding of the most basic issues about the energy business. I say that as a lapsed liberal. I like to say that when it comes to energy, I'm a liberal who got mugged by the laws of thermodynamics.
As to your specific question about the energy equivalents of a cubic mile of oil, I have seen graphics that show what that quantity of energy is equal to. While I can't recall the specifics, my general answer is this: no matter what the source, the issue is always about energy density. The reason we use fossil fuels -- and we will be using them for decades to come -- is that they give us the energy density we need to perform the tasks at hand.
Solar and wind power are good. I have 3200 watts of solar panels (photovoltaics) on the roof of my house in Austin, TX. But turning the diffuse energy of the sun, and the diffuse kinetic energy of the wind into usable power takes a lot of energy.
You have used my favorite Milton Friedman quote: There's no such thing as a free lunch.

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Pittsburgh: Is the goal really energy independence, or is it a more balanced energy portfolio?

Robert Bryce: According to John McCain, Hillary Clinton, and Barack Obama, the goal is energy independence. I don't ever hear them say "balanced energy portfolio."
Last year, Congress passed the Energy Independence and Security Act of 2007.
Our energy discussion has been degraded by use of this cheap rhetoric about "energy independence."
We need to accept the fact that real energy security means accepting the reality of energy interdependence. A few quick facts:
In 2007, the US bought oil or oil products from 90 different countries. (These numbers are from the EIA.) And, amazingly enough, the US exported oil or oil products to 73 different countries.
The global energy market is just that, global. We need to accept that fact and move past this nonsense about independence.

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Alexandria, Va.: Please address algae-based biofuels, which have yields hundreds of times greater per acre than Corn/Soybeans, are grown on carbonless desert land, and use no fossil fuels in their production. Yields of 180,000 gallons per acre/year have already been reported, by multiple vendors...

Robert Bryce: I'm hopeful about algae fuels. The devil, of course, is in the details. Last week, I heard a presentation from one startup that is using non-photosynthetic algae. They produce it in big industrial fermentation tanks. The problem is that they have to feed the algae, which means it has an inherent limitation in terms of scale. Photosynthetic algae, like the one you mention, sounds promising. I mention algae diesel in Gusher of Lies. The good thing is that algae can be used to produce a diesel or jet fuel, not alcohol. That gives it an immediate advantage because it can be utilized by the existing infrastructure (pipelines, tanks, pumps, etc.)
But again, the key questions are about scale, how fast can it ramp up, what are the costs, etc.

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Ridgecrest, Calif.: Many people talk about the energy advantages to using electric vehicles. These are great, but people don't seem to understand that the energy to power that vehicle has to come from somewhere. My diesel truck might be putting soot into the LA basin, but their electric car needs to be powered by the coal-burning energy plants that they abhor. Or am I missing something?

Robert Bryce: You are right on the money.
Again, batteries are the key.
I'm not opposed to electric vehicles. But they come with a cost, i.e., the power has to be generated somewhere, using, typically, some type of fossil fuel. I'm a proponent of natural gas vehicles. But they are largely ignored in the current discussion.

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Las Cruces, N.M.: Can you confirm or refute ethanol as a viable fuel source for America? I am very concerned about the use of food sources and resources that should be used for food for fuel.

What will it take to break the fossil fuel dependency?

Thank you. Please keep speaking the truth.

Robert Bryce: There are a myriad of problems with corn ethanol. Earlier this month, a study funded by American beef, pork and chicken producers estimated that the total cost to taxpayers of the corn ethanol mandates now exceeds $33 billion per year. Thatís equal to about $106 per American citizen.
On March 11, the USDA released its report on world agricultural supply and demand. The USDA estimates that global grain demand will grow by 5.4 percent this year. Fully half of that growth will come from U.S. consumption of corn for ethanol.
There's no question, none, that the corn ethanol scam is driving up the price of food.
As for our fossil fuel dependency, I believe that as prices rise, it will be economic to move to other, non-fossil sources. I cannot see us moving away from fossil fuels until we have alternatives (whether that's solar, or nuclear, or some other source) that can compete head-to-head, on a non-subsidized basis.
We don't use fossil fuels because we are bad. We use them because they are the cheapest, cleanest, most convenient sources available to us. We will switch to other sources when they become cheaper, cleaner and/or more convenient. But not until.

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Washington, D.C.: What percentage of oil that the U.S. consumes is imported (as opposed to coming from Texas or Alaska) and what percent is imported from around the world (and does it all come from the Middle East)?

Robert Bryce: The US now imports about 60 percent of its oil. In 2005, 11 percent of our oil needs came from the Persian Gulf. Our two biggest suppliers in recent years have been Canada and Mexico. Our biggest natural gas supplier, by far, is Canada. You didn't ask, but here's another fact: We also import electricity from Mexico and Canada.
One other fact: while we import 60 percent of our oil, we import 100 percent of 18 mineral commodities including things like manganese, vanadium, bauxite and others.

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Dunn Loring, Va.: Given America's oil reserves are located in relatively expensive to access oil shale, doesn't it make sense to utilize the cheaper resources of other countries now, and then develop our resources once supplies are truly tight?

Robert Bryce: America has significant amounts of oil and gas that are just not available for drilling. For instance, the eastern Gulf of Mexico has about 3 billion barrels of oil and 20 trillion cubic feet of gas. Further, it's close to consumers, close to the industrial base (in TX and LA) and close to the labor market. There are also huge oil reserves in Alaska. But Congress is preventing their exploration. I understand your point, but I believe we should be increasing our domestic production. It just makes economic and political sense.

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Falls Church, Va.: Who cares if we're "denying funds to petro-states" or not? The point of not needing their oil is that we won't need to have as many troops in Iraq, Qatar, Saudi Arabia, Diego-whatever-it-is, Turkey, Kuwait, etc. to protect the oil. Right?

Robert Bryce: The Chinese are buying all the oil they need on the world market and they don't have a single soldier in the Middle East. I wrote a recent cover story for the American Conservative in which I point out that the trend in the 21st century is that markets are trumping militarism. For all of America's efforts to isolate the Iranians, other countries are doing myriad deals with them to develop their oil and gas resources.
The US has made a huge strategic blunder by assuming that militarization of the Persian Gulf means energy security. It doesn't. And we are now paying $3 billion per week in Iraq to learn that lesson.
Bush/Cheney and their neocon cronies have led us into a disastrous war that has reduced our energy security, not increased it.
The world has an interest in a stable Middle East. The problem is that the US has decided to be the unilateral power in trying to reshape the region to its liking.
In Gusher of Lies, I quote Leon Hadar, who talks about this issue. He says that it's not the US who will be most hurt by a disruption of oil flows in the Persian Gulf, it's Europe and Asia. Thus, says Hadar, those countries "should start paying most of the costs of protecting their economic interests in the region."
I agree with him.

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San Francisco: Is it true that it takes as much corn (to produce ethanol) to fill up your SUV gas tank once, as it does to feed one human for an entire year?

Robert Bryce: Yes. That number is correct.
The food versus fuel issue is the key one. And it appears there is a growing consensus that the ethanol scam needs to be addressed. The question is: When?
I fear that Congress will find it is easier to create subsidies and mandates than it is to repeal them.

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Mt. Lebanon, Pa.: One more thing.

If you had to teach the public anything about energy and alternatives, you couldn't have picked a more apt description.

It's all about "energy density." Literally. It should be taught in schools, even as a mantra.

Thanks for stating it.

Thanks much.

Robert Bryce: Thanks.

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East Moriches, N.Y.: Do you expect to see a crash in oil futures within the next few years? If so, how low can it go?

Robert Bryce: Hmmm. This is tough. I could predict the futures market, I'd own the Washington Post, and a whole bunch of other papers.
I understand that the oil companies are now using $60 as their "price deck" for new projects. The oil sands projects in Canada need that price, or better, to be profitable.
I don't expect a crash in futures. But if the expected new production in OPEC comes onstream -- there is talk of an increase of 2 million bbls/day over the next two years -- prices might fall slightly. But I don't expect much of a decrease. I think $100 oil will be with us for a while.

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Silver Spring, Md.: You said that you favor natural gas vehicles. Why? What makes them so great? Won't we need to import more natural gas?

Robert Bryce: Natural gas-fueled vehicles produce negligible quantities of air pollution. They emit about 15 percent less greenhouse gases than comparable diesel-fueled vehicles and about 20 percent less than gasoline-fueled ones. Natural gas vehicles would be good for consumers. Natural gas at the pump costs about one-third less than conventional gasoline.
Using more natural gas in the transportation fleet could help reduce oil imports. The U.S. currently imports 60 percent of its oil, but just 20 percent of its natural gas.
Better yet, over the past few years, the US gas industry has dramatically increased production. They are having remarkable success in developing coal bed methane, shale gas and other sources.
The key limitations for nat gas vehicles are:
1. limited range
2. few refilling stations.
This week, I spoke with a Toyota engineer who sees nat gas as the fuel of choice for a fuel cell car. And that car would have a range of about 300 miles.

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Alexandria, Va.: I am an atmospheric scientist, and am quite disturbed by your call for greater domestic production of fossil fuels. The current price increase in fossil fuels are the greatest boost for expanding alternative fuel research (from which I exclude corn-based ethanol) that we have seen in decades. If increased domestic production serves to slow or reverse price increases, then public motivation for research will evaporate.

As you said earlier, people are cheap, be it in their choice of inexpensive gasoline and coal based electricity, or baby toys imported from China and sold at Walmart. Will higher prices be painful for people? Yes! But few things that are really worth doing are easy or painless.

Robert Bryce: Higher prices on fossil fuels are the only thing that will drive us to embrace alternatives. That said, higher prices also make it economic to produce domestic oil and gas. I see both things happening.

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Washington, D.C.: Are there ethanol pipelines in development? The current system of transporting ethanol by train and truck doesn't strike me as fuel-efficient or carbon-efficient, not to mention the backwards policy of subsidizing ethanol from corn.

Robert Bryce: There is talk of an ethanol pipeline -- but the builders want federal subsidies. One subsidy begets another.
And yes, you're right. The problems of transporting alcohol are a key constraint. Moving billions of gallons of motor fuel by truck and rail is far more expensive than moving that same fuel by pipeline.

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Silver Spring, Md.: Mr. Bryce, in Maryland we are suffering through the delusion that electric "light" rail will help solve our transportation-related energy problems. The electricity would come from coal. Backyards are literally being threatened (it would be a shallow tunnel between 2 streets in 1 scenario)with hundreds of trees chopped, just in that neighborhood. Thousands would be felled along the ROW. Then rezoning would replace the small, shaded houses with energy-hogging hi-rises. We need more diesel-electric buses, and serious talk about population stability!

Robert Bryce: The DOE is funding studies on hybrid-electric buses. But as I've said before, I'm a fan of nat gas vehicles, too.

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Lincoln, Neb.: If renewable energy cannot meet our needs, then what will happen down the road when we finally exhaust all fossil and nuclear fuel sources? The end of civilization as we know it?

Robert Bryce: I'm an optimist. Perhaps that's due to the fact that I have three young children, but I think we'll figure things out.

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Alexandria, Va.: But, what if any is the actual advantage to our buying energy from other countries, instead of producing it domestically? You are not making the case that we CAN'T, you're making the case that we SHOULDN'T. What gives?

Robert Bryce: The global energy market is always determined by the least-cost provider. I am in favor of increasing domestic production of energy, on a non-subsidized basis.
Let's get rid of all mandates and subsidies and let them compete: fair field, no favor.

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Burbank, Calif.: How much control does the oil industry have over possible competing energy sources? Is it true that much of competing sources have been purchased by the oil industry who in turn have been slow to develop these new industries?

Robert Bryce: I don't necessarily agree. I know the conspiracy theorists like to blame the oil companies for killing the electric car, or whatever, but these companies are in business to make money.
ExxonMobil just introduced a new battery. Why? They are interested in profit.
BP and Shell are investing in solar.
Chevron is, I believe, the biggest producer of geothermal power in the US.

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Robert Bryce: Ok, it looks like I'm out of time. Thanks 1,000,000. This was fun.

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