Friday, July 11, 2008

Two Solutions to America's Energy Crisis

In today's WSJ, Joseph Petrowski, the president of Gulf Oil, offers his solution ("A Bipartisan Fix for the Oil Crisis"). In a nutshell: Democrats need to agree to allow increased domestic exploration and production and Republicans need to agree to higher fuel efficiency standards for cars and trucks. Excerpt:

We can responsibly drill. The technology to find, drill and recover oil has evolved tremendously, and careless drillers will fear tort lawyers more than government regulators. The claim that the oil companies are sitting on leases and not drilling defies all logic. With oil at $135 per barrel and drilling rigs renting at $300,000 per day, there are no idle rigs anywhere.

In The American, Andy Grove, former CEO of Intel, offers his solution ("Our Electric Future"). Somewhat confusingly, he uses the term "dual-fuel" to refer to what most seem to call "plug-in hybrids", i.e., cars that can travel shorter distances on an electric battery but have a back-up gasoline-powered engine. Nevertheless, his general point makes sense: if cars ran primarily on electricity, the country would be less vulnerable to energy shocks because that electricity could be generated by a variety of sources: natural gas, coal, nuclear, etc. Consistent with my point in an earlier post ("Why Oil Prices will likely be Higher in 5 Years -- But not Necessarily in 10 or 15"), Grove notes,

No matter how fast the production of dual-fuel cars is ramped, replacing the bulk of the approximately 250 million cars on the roads in the United States with new cars will take a decade or more.

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