Will Blog for Experience: Emily

I'm a student blogger for Experience.com and if my blog gets the most readers out of these 5 blogs I will be going to Washington, D.C. for a job shadow at the Department of Energy, courtesy of CBCampus. Experience is a career site specifically for college students & alumni. They provide extraordinary job opportunities, real-world insights, and a network of inspirational role-models to help students explore and launch careers they love. Keep reading my blog if you want me to lead this challenge!

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Tuesday, December 26, 2006

"Nigeria Pipeline Explosion Kills 200"

This afternoon, the Wall St. Journal reported that a petroleum pipeline in Nigeria exploded and killed 200 people. I wasn’t planning to post a discussion on this topic but this news development provided the appropriate context.

Whether referred to as the “paradox of plenty”, “dutch disease”, “oil curse”, “the devil’s excrement”, or “governance curse”, the association of oil and corruption in underdeveloped countries is undeniable.

Both Nigeria and Ecuador have become victims of environmental and human rights problems as a result of oil cultivation. Large oil companies have erected headquarters in these underdeveloped areas and have divided the local communities as a result. Sentiments among the locals in both regions are somewhat divided. It seems Nigerians (especially in the Ugborodo region) covet the modern technologies they’ve caught glimpses of within Chevron’s headquarters. Ecuadorians are slightly more protective of their primitive, Amazonian lifestyles yet some locals aspire to develop/Americanize their schools and other systems. These divisions in opinion regarding local development have fueled tensions between the local inhabitants of these regions. Disparities among those who work for (i.e. are lucky enough to secure labor contracts from) the oil companies versus those who attempt to maintain non-oil related jobs further the problem.

The “intrusion” of western culture in these areas has also led to violent riots. These riots not only threaten and devastate the oil infrastructure but they also harm local businesses and homes. Abuse and questionable ties between the state authorities and oil companies represent another form of human rights violations. Oil companies rely on the local military for protection but the military is often guilty of mistreating its own local citizens.

Aside from the impact on human rights, oil production is responsible for negatively effecting the environment. Pollution and waste-dumping directly contaminate major water supplies, which facilitate the spread of disease and illness. In Nigeria, Chevron artificially expanded an existing river to encircle their headquarters, which caused major flooding in surrounding neighborhoods and is expected to completely destroy some areas in the next few years.

Though the oil companies have made large-scale, million-dollar efforts to rectify existing damage and prevent further destruction, many believe more can be done. The oil companies do split their oil revenues with the local governments but corrupt officials prevent these proceeds from benefiting the state and their local inhabitants. The companies are responsible in so much as they can influence the governments to enforce human rights standards and proper economic development. The ultimate power lies with the local governments but the companies do play a role; and play a large role given how influential their examples and financial contributions are.

I would think it is in the best interest of the companies to establish favorable relations between themselves and the local inhabitants. Aside from doing what’s morally right, companies will decrease their exposure to harmful publicity and subsequent financial penalties. Dissolving tensions between themselves and surrounding locals will also decrease the financial impact of riots and attacks on machinery. For example, today’s explosion in Nigeria was reportedly caused by locals trying to capture leaking oil from the pipeline.

I do think local governments are ultimately responsible for their citizens, military, and economic conditions and thus it is up to them to establish and enforce a proper socio-economic system. However, the oil companies are providing them with huge amounts of capital and with the potential for modern development thus they hold some responsibility to properly influence the existing authorities. Oil companies need to provide an incentive to change since these governments are seemingly indifferent to the plights of their people. I do believe that instituting a government that cares about its citizens will have the greatest effect on reversing “the paradox of plenty”, “the oil curse”, or whatever you wish to call it.

Renewable energies…the light at the end of the tunnel?

In light of my quasi-dismal outlook on ethanol, I hope to give a more optimistic perspective on other renewable energies. In deciding how to transform our current energy economy it’s important to keep in mind the two basic sources of energy: electricity (generated by coal, nuclear, hydro, wind, solar, etc.) and liquid fuels (oil, natural gas, and biofuels). The success of alternative, renewable electricity sources suggests that we should make an effort to rely more heavily on electricity for our energy needs.

Solar power systems involve using the sun’s heat to produce electricity. There are numerous types of solar power sources (active systems, passive systems, photovoltaic systems, solar water processes, etc.). Most of us are familiar with solar panels, which use solar energy to heat and light buildings. I was told the following statistic at a conference so hopefully my source is valid (of course I’ve forgotten who said it) but nonetheless the speaker claimed that covering every mall in America and/or every parking lot with solar paneled roofs could provide enough electricity to power every residence in the U.S.

Wind is another renewable (and non-C02 emitting) power source. Wind farms are hugely popular and successful in parts of Europe and are popping up around the U.S. It’s relatively easy (using science I don’t understand) to measure/determine the best places to capture wind, which include both on and off-shore sights.

Yet, the largest drawback to wind and solar energies is their intermittency – the wind is not always blowing and the sun is not always shining. The real problem lies in our inability to store excess power efficiently. Water dams seem to have the most potential with regard to storage. The excess energy (i.e. the energy not immediately or directly consumed) could be used to pump water into a dam, then when the sun sets or the wind settles the dam would be drawn upon to provide the needed electricity. The costs and efficiency of such a system are debatable but there’s no doubt that wind and solar power could greatly reduce our reliance on fossil fuels even if they aren’t able to completely displace their use at present.

The last of the most promising, renewable power sources is hydrocarbon. Everyone seems to be talking about the possibility of a “hydrocarbon economy”. So what is it? Hydrocarbon is the most plentiful element on earth and can be produced from a variety of resources by numerous technologies. Plug-in hybrids and fuel cell vehicles rely on power derived from hydrocarbons and are looked to as the future of automobile transportation. Fuel cells employ the energy of hydrogen to generate electricity without combustion or pollution (that means little to no emissions!). Toyota and Ford have both released hybrid cars which have been seamlessly adopted by thousands of consumers; BMW also recently announced they will introduce the world’s first hydrogen-burning car in April.

As someone focused on the economy, I am definitely interested in finding economical ways to transfer our energy dependence to new, renewable sources. In light of the success and growing prominence of “green” vehicles my next post will focus on “green” advertising and the economic importance of convincing the every-day consumer that energy is something worth paying attention to and worth paying for.

Wednesday, December 20, 2006

Ethanol...Not quite the White Knight.

My other posts have touched on rising demand for oil, peaking production, instability in the Middle East and urban sprawl so it’s not surprising that President Bush labeled the U.S. as a nation “addicted to oil”. Following Bush’s declaration of our addiction he explained that ethanol was here to save the day. But as with most energy topics there is a lot of debate over ethanol’s potential. I see two main areas of argument: 1) ethanol’s energy return on energy invested (EROEI) and 2) the ability for ethanol to cure our oil addiction.

EROEI is common statistic used to compare the amount of energy invested in an energy resource versus its net output. However, people disagree on which variables should be included in this calculation and thus there are huge discrepancies with regard to the EROEI of ethanol (among many other energy processes). I don’t know enough to come to my own consensus on the EROEI of corn-based ethanol but there is a general consensus that ethanol derived from sugar cane is easily twice (or even four times) as energy efficient as corn-based ethanol. Sugar-based ethanol is also less carbon intensive since it requires less industrial input per unit of output.

As some of you may be aware, Brazil recently achieved “energy independence” when their oil imports equaled their oil exports. Moreover, Brazil was able to displace 40% of their petroleum consumption with ethanol. So if they’ve done it, we can too…right? Wrong. For starters, our agricultural industry is grounded heavily in corn whereas Brazil is a large producer of sugar cane, which enables Brazil to rely on a more efficient energy resource.

So why wouldn’t we just use ethanol derived from sugar cane? The political and social obstacles involved in importing an agricultural resource over using our own domestic product (corn) are large. Yet, there are a host of others reasons why it is unreasonable to think we can follow in Brazil’s footsteps. The U.S. population has 62% more people than Brazil, all of whom (on average) consume over six times the amount of oil per capita annually as compared to Brazilians. Brazil produces 4.8 billion gallons of ethanol per year and by doing so, displaces 40% of their petroleum gasoline consumption. The U.S. is expected to produce an equal 4.8 billion gallons of ethanol this year, which will only displace about 3% of our gasoline use.

Despite the fact that ethanol can’t single-handedly cure our oil addiction, it definitely can help and can be used as a bridge-fuel until we are able to transform our current energy economy into a renewable one. I see ethanol as one of many steps in the right direction, but it’s not the panacea that I fear many people believe it to be.

(To the few who check in regularly, my apologies for the infrequent posts – now that finals are over I will be posting at least twice a week…thanks again for all the support!)

Tuesday, December 12, 2006

The Market for Climate Change

After wearing flip-flops to breakfast yesterday morning (in central Maine, in December) I thought it might be a good time to post a discussion related to climate change. As many of you are probably aware, Al Gore released a documentary this summer entitled “An Inconvenient Truth” which focused on the frightening reality of climate change. The film faced considerable backlash but I think it made some important points and thus I would recommend everyone see it.

It seems most people understand the negative relationship between disproportionate carbon dioxide (C02)/greenhouse gas (GHG) emissions and our environment. Simply put, the increase in the atmospheric concentration of C02 is responsible for rising temperatures and is the result of excessive amounts of C02 emission. Oil-refining, power plants and auto emissions are the biggest contributors to the excess C02 in the atmosphere.

Since the 1970’s, average temperatures in the Artic have risen five degrees resulting in a three percent reduction of the polar ice caps. This is just one example of global warming taking place in the world today. Scientists estimate that severe warming effects (such as higher sea levels, hurricanes, droughts, and infectious disease) will occur after the atmospheric concentration hits 550ppm. With the current concentration around 370ppm and estimates that this number will double if we continue on a “business-as-usual” path, a response to global warming seems essential.

A highly publicized response to climate change is the Kyoto Protocol. The Kyoto Protocol calls for a fixed decrease in the amount of C02 by specified deadlines. There is a considerable amount of controversy surrounding the Kyoto Protocol so I will make no attempt to present each opposing argument. However, there is a popular argument in the U.S. that opposes the Protocol on the following grounds: harnessing pollution in the U.S. would also mean harnessing economic growth.

The undeniable relationship between energy consumption and economic growth is a major issue and has spurred the advent of “Free Market Environmentalism.” Our market is not designed (nor guided at the moment) to respond to environmental issues, but free market environmentalism proposes that we manipulate the market to account for environmental implications. The Kyoto Protocol incorporates a type of free market environmentalism known as Emissions Trading. Participatory nations can meet their targets by reducing actual emissions or by purchasing “rights to pollute” in the form of emissions credits. Emissions trading assigns a numerical value to polluting and thus creates a market for the social cost of pollution. In effect, the seller of the credit is rewarded for reducing emissions below their mandatory target, whereas the buyer is fined for over-polluting.

This is one of many ways we can reasonably reduce emissions while still adhering to the principles of our financial system. Adjusting the market to account for the negative externalities associated with any form of production is an important point (and one which I will take up again when I discuss alternative energy and the importance of our role as consumers and voters).

A few ways you can reduce your C02 emissions include*:

Unplugging un-used electronics to save 1,000 lbs of carbon dioxide annually…electronic devices that are plugged-in use energy even when they are turned off.

Supporting the renewable energy market by buying renewable energy certificates and green tags.

Buying a Hybrid Car (or carpooling when you can): The average driver could save 16,000 lbs. of CO2 per year by driving a hybrid.

Planting a Tree to offset 2,000 lbs. of carbon dioxide per year.

* Figures taken from www.stopglobalwarming.org

Thursday, December 07, 2006

The Peak Oil Debate

As mentioned in my introductory post, my first topic is the widely debated subject of Peak Oil. The subject itself is not so much an issue of debate but when this global peak will occur is a point many disagree upon.

First, let me clarify what Peak Oil means. Marion King Hubbert, a geologist in the 1950’s, modeled oil reserves and production rates and projected a bell-shaped production curve (known as Hubbert’s Curve and pictured below).

The peak of the bell curve is the point at which production (in an oil field or globally) reaches its maximum rate of production. Many people confuse Peak Oil with the point at which the world will run out of oil; but it is not, it is simply the point at which production rates begin to decline. Very few dispute the finite nature of oil as thus it is widely accepted that world oil production will eventually hit a peak. The United States hit its peak in 1971, and has been a net importer of oil ever since.

So why is this peak so widely disputed? The main argument is over when peaking will occur. Some argue that the world has already passed its peak; some believe we will cross the peak within the next five years, and others don’t see production declining for over twenty years.

How can there be such a wide variation in predictions? Estimating the world’s oil supply depends on hundreds of variables: price, foreign relations, accuracy of reported information, measurability/collection of data, technology, demand…the list goes on. There is so much uncertainty surrounding these variables and so many diverging opinions about how to interpret information that everyone seems to be able to support a different estimate with a valid argument.

So what if we peak? The real concern over when peak oil will occur stems from the increasing world demand and growing reliance on oil. Oil affects our daily lives in more ways than we usually recognize. Yes, we’re all aware that we need oil for fuel to power our cars, planes and other machinery but petroleum is also used in the production of plastics, fertilizers, lubricants, and pharmaceuticals. With an ever growing demand for oil (especially from large developing countries like China and India) we will not only need to maintain current production rates but increase them at a pace sufficient enough to meet this new demand.

And herein lies the significance of the Peak Oil debate. To simplify the debate, you can lump the different outlooks into three groups: 1) Those who think the world's oil production has already peaked, 2) those who think we will peak within the next five years, and 3) those who don’t think peaking will occur for over twenty years. General perspectives for each of these three groups can be explored in greater depth at the following sites: 1) Pessimists' view: www.dieoff.com, 2) Matthew Simmons’ speeches: www.simmonsco-intl.com, and 3) Exxon Mobil’s take on Peak Oil: http://exxonmobil.com/Corporate/Files/Corporate/OpEd_peakoil.pdf

My outlook falls somewhere in the middle. I believe that oil resources are exhaustible but that current changes (to be discussed in a future post) can significantly delay the inevitability of a peak and more importantly can avoid overwhelmingly negative situations as oil becomes increasingly scarce.

For more information regarding peak oil, you can also check out ASPO’s site: www.peakoil.net.


Well, if you are reading this you are probably a member of my family, a coerced friend, someone who received my mass facebook plea or someone associated with Experience. Regardless of who you are, you might be wondering why I, a virgin blogger, have decided to embark on this 21-day energy blog. Though I would be willing to bend over backwards and jump through flaming hoops for the opportunity to shadow an employee at the Department of Energy (DOE) for a day, I figured blogging was a much safer option.

For those not familiar with the Experience program, I’ll explain. Five candidates (including myself) are having a “blog-off” for three weeks. At the end of the three weeks, whoever has received the most hits to their blog will be given the chance to shadow an employee at the DOE for a day.

So why do I want this? I’m not a government major, nor do I have a solar-powered house, nor is my family fortune tied to an oil well in Texas. I’m a senior at Colby College in Maine and am majoring in Economics. I consider myself energy conscious yet I drive an SUV and am sometimes guilty of leaving the lights on when I leave the house. I do have a genuine interest in energy and in the way it affects the social, economical, political and geographical aspects of our everyday lives.

I became increasingly interested in the energy industry (specifically oil) last summer as an intern on Wall Street. My group focused on Natural Resource companies and after returning to campus I enrolled in a course which explores the global oil situation and the energy industry overall. A few energy conferences and an independent research paper lead me to this point…vying for the chance to see first-hand the day to day operations of the DOE.

Given my focus on economics and my future on Wall Street, my blogs will likely approach energy topics from a business perspective. I hope (but really BEG) you to continue reading my posts and send in your comments/questions. My tentative topics include:
1. The Peak Oil Debate
2. Climate Change
3. Renewable energy
4. “Green” advertising
5. The Government’s role regarding energy
6. Ways we can “reduce our daily impact”*

I appreciate your support thus far and look forward to the next three weeks!

*This slogan was borrowed from MTV’s “green” campaign.