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Final Position Paper:

American Energy: Future Initiatives

The Mideast Oil Crisis of 1973 was a valuable lesson to the people and government of the United States. The crisis demonstrated how vulnerable the United States was on foreign oil and how little control the government had on ensuring a long term energy policy. Any dependence on a foreign nation for a vital function of the United States is a great risk and must be addressed for national security reasons. With the major oil exporting nations of Saudi Arabia, Venezuela, Russia, Iran and Nigeria consistently troubled with internal discord and China emerging as a large oil consumer, the price of oil is highly unstable. Current oil prices are hovering near all time highs, with a new all time high reached in early-April 2005. High oil prices not only damages the entire economy, but specifically the airline industry, which passes the higher fuel costs to the passengers, and the owners of fuel inefficient automobiles, such as part of the low income bracket and small business construction contractors. The higher oil prices have hurt these small business owners and the airline industry by making a fundamental cost almost double in the last three years. Another problem with higher oil prices is that the high prices begin to raise inflation worries. It was estimated that a 10% increase in oil prices would yield a 0.1-0.8 percentage point price increase for goods in the United States and the European Union (LeBlanc 2004, 16). Other countries, such as Japan and Australia, share a similar fate that a sustained increase in oil prices would raise inflation similar to 0.1-0.8 percentage points (LeBlance 2004, 20). The United States does have a temporary solution with the Strategic Petroleum Reserve but a long term solution is needed. The President is the only one with the authority to tap in to the strategic petroleum reserve, but the current administration, like those before it, have vowed only to do so in true cases of emergency. One such situation would be another embargo or some large disruption of supply. If the President were to flood the market with oil then the short-term prices would fall, but again this is only temporary because the reserves, although quite large, are not endless. Fortunately a largely available energy resource within the United States may be a cheap alternative to oil, and something we may control and export in a manner which OPEC has done over the last thirty years. That resource is coal.

Research into cleaner and more efficient uses of coal is not something new. After World War II large sums of funds were allocated to find energy replacements for petroleum because of its scarcity during that period (Winslow, 4). However, a large concentrated research initiative started and partially funded by the U.S. Government should be started immediately. The goals of current research are to make coal into a liquid to replace gasoline as a fuel source for engines. This research should be expanded the include diesel fuels and aviation fuels to cover the spectrum of a large of consumer consumption. Current problems to overcome include cleaning the coal and its byproducts so that the emissions are clean enough environmentally to be profitable. The economic impact of this research will increase the demand for coal, something the United States has mined for the past two hundred years; also coal processing plants will sprout up in locations that house current oil refineries for continued distribution. There shall be a need for more technical and highly trained individuals to oversee and improve on liquid coal technology, which is an economic benefit to the industry. Because the Appalachian Mountain region is like a giant coal brick, the United States has ample supply to last at least the next one hundred years (World Coal 1998, 1). The only two countries with large coal deposits are China and the United States. Because China’s economy is booming there need for oil and fuels has been on the increase. Since the United States has a surplus of coal we export a large percentage of it to China (World Coal 1998, 1). When liquid coal technology comes online then it too will be exported to China to help feed their energy needs. Eventually the technology developed in the United States should be exported to foreign countries at a price to create revenue and to help those countries rely less on foreign energy sources. I suspect that one day liquid coal will be exported to the Middle East as a twist in fate.

Another research area is to use coal to create hydrogen for hydrogen fuel cells that are clean and efficient for small automobiles and larger equipment. Hydrogen itself is not abundant on Earth and to use it in a liquid form is all the more difficult (Song 2003, 1). By using coal scrubbers and other refining techniques current technologies allow for medium-traces of stored hydrogen gas to be extracted from the coal bricks using a technique called gasification (Song 2003, 2). Using this method, then converting the remaining coal into a liquid fuel will increase the efficiency of coal and fuels. Such as petroleum is mined and refined to produce gasoline and diesel fuels, coal may be mined and refined to make hydrogen fuel and liquid coal. Another possibility is the design and construction of a future generation power plant that burns coal to produce power but the emissions are used to produce hydrogen gas, thereby eliminating most of the greenhouse gases (Winslow, 4). A steady research program over the next twenty five years will not only create new markets and innovation, it will ensure the national security of the United States such that we are less dependent on foreign sources for fundamental resources. The natural candidates to front some of the money for this research would be the large energy and oil companies such as Shell and Exxon. To help pay for these new research initiatives an oil tariff of $1.25 per barrel will be imposed on all imports. The United States imports 12 million barrels of petroleum each day (USGS 1999,1). Using static import data from 1998 the total annual funds raised from the taxes would reach $5.78bn for various research initiatives and infrastructure each year. A static forecast over thirty years yields the funds available of $130bn in 2005 dollars for this initiative.

The Mid East Oil Crisis was a rude wake up call for the United States and it responded with the Strategic Petroleum Reserve, but this is only a temporary solution. The current oil prices are near all time highs and reached a new all time high in early-April 2005. High oil prices harm the entire economy, from airlines, to the poor, to small business owners, and it causes inflation to raise its ugly head. The time to research new technologies for new resources is now. One such resource readily available is coal, and coal research needs to be expanded over the next twenty-five years. The use of liquid coal will be a huge new market for the United States and will be a large export to bring down the trade deficit. Also, coal may be refined to produce hydrogen fuel and liquid coal to make its use more efficient. The United States must act now before it is too late.


Refernces

Chunshan Song, "Overview of Hydrogen Production Options for Hydrogen Energy
Development, Fuel-Cell Fuel Processing and Mitigation of CO2 Emissions.” [web page] Sep 2003; http://www.netl.doe.gov/coal/fuels/refshelf/papers/pgh/Overview%20of%20Hydrogen%20Production%20Options%20for%20Hydrogen%20Energy%20Development.pdf [Accessed 28 Mar 2005].

Mark C Winslow, "Technology Plan: Coal Fuels." [web page] Dec 2004;
http://www.netl.doe.gov/coal/fuels/refshelf/pubs/Technology%20Plan%20Coal%20Fuels%20-%202004.pdf [Accessed 28 Mar 2005].

Mark LeBlanc, "Do High Oil Prices Presage Inflation?" [web page] Feb 2004;
http://econ.ucsc.edu/faculty/chinn/pubs/Presage.pdf [Accessed 28 Mar 2005].

USGS, "United States Energy and World Energy Production and Consumption Statistics." [web
page] Jan 1999; http://energy.cr.usgs.gov/energy/stats_ctry/Stat1.html [Accessed 28 Mar 2005].

World Coal Institute, "Coal Reserves are Plentiful". [web page] Dec 1998;
http://wci.rmid.co.uk/uploads/coal_reserves_plentiful.pdf [Accessed 28 Mar 2005].


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