San Diego Housing Bubble News and Analysis

If the economics of this is so easy, why does he need to sell a plan?

He should just borrow some money and start building windmills.

Of course, he can't though, can he?
Cuz the economics don't really work do they ?
Cuz if they did, there'd be lots of guys building windmills, wouldn't there?

He is not selling a plan.

He already is building the windmills. The first farm he is building will be the largest in the world.

The plan is about 1.2 trillion. He is not quite that rich.

We will spend that much on imported oil in less then 2 years.

Actually the economics do work.

What is your alternative?

I also believe in Picken’s thinking. The fact that he is a long time oil man trying to impart his life-learned wisdom should speak reams about the logic of maintaining an oil based economy.

The market, driven by increasingly high gas prices, is currently selecting new, more efficient (and cleaner I might add) oil-addiction-breaking technologies. Why our current president is advocating MORE DRILLING to continue feeding our economic addiction to oil, implies little foresight and an unsustainable solution to this energy crisis – that’s your kids' futures we’re talking about here….

CNG vehicles have range issues and there is a huge cost for installing the infrastructure (fuelling stations). They perform well but plug in vehicles are better, use the natural gas to make electricity, just plug in vehicles at home, the infrastructure is already in place.

This is an example of what $5+ gas will do and is doing, it will get the smart people in this country diverting their energy into solving the problem and it will get solved. Wind farms and solar are the future and they will become more cost effective and efficient. We will get to the point that we can generate power entirely from free and unlimited sources that create little to no emissions, just wait and see. This is the new space race, my money is on the Americans.

Now if we can just get apple to make cars, got the new iphone Friday, holy crap that thing is amazing. If you would have told me 10 years ago that it would exist I would have laughed at you. In ten years, you wont recognize the freeways.

The most ironic thing is that the twin towers will be remembered in 50 years as the catalyst for the upcoming energy revoloution. We tried to kill our enemy and it's hopeless, our next move is to eliminate their source of revenue and power and only because of 9/11 will the government and the people embrace this new direction. It will also be a method to save the economy, think of it as a modern version of the WPA.

I think that we all agree that the country needs to wean itself from imported oil. There are many ways to do that.

It is quite unrealistic to believe that the rich will not get richer as infrastructure is built up for a new energy platform. I actually don't really care about that anymore. Pickens made a zillion on oil and now he sees opportunity to make more zillions because of the new paradigm for oil... that it will not only never return to levels we saw as little as a year ago but it will only get more expensive.

I believe it is imperative to wean the country off of imported oil or at least reduce it to 10-20% level. If that means incentivizing companies to build that infrastructure or even direct government funding I am for it.

We are about to watch the FED basically prop up Fan and Fred with a wide open discount window. We have already watched a 300 billion dollar package sail through our legislature.

Personally I would rather see every penny of that go towards building windmills but I guess other people disagree.

Have anyone done extensive study on how massive windmills farms would affect climates? Wind energy is being absorbed by these windmills. Does anyone know of the side effects when we have many many more of these farms absorbing all of these energy? I think the only truly green and endless energy we can use without any side effect I can think of is solar. But wind is cheaper and is profitable at today's oil price. So, that's a definitely great first step. Maybe with the big race for the next source of energy, we'll have another break through. Only time will tell.

asianautica,
Are you talking about chaos theory? "The flapping of a single butterfly's wing today produces a tiny change in the state of the atmosphere. Over a period of time, what the atmosphere actually does diverges from what it would have done. So, in a month's time, a tornado that would have devastated the Indonesian coast doesn't happen. Or maybe one that wasn't going to happen, does. (Ian Stewart, Does God Play Dice? The Mathematics of Chaos, pg. 141)"

Thw wind farms won't affect the globe, winds will blow, resistance exists and varies in nature, forests do more to baffle wind than any farm ever would. That would be funny if people wnated to cut down the trees because they slow the wind.

Solar has a minimal effect as well, the sunlight is not absorbed into the earth or reflected and doesn't warm the earth, it is absorbed somewhat. Both methods have such a minor effect that you shouldn't lose sleep over it. Plus both methods reduce the burning of fossil fuel and release nothing into the environment, they are improvements.

So that is a no to chaos theory? I have heard the wind farms kill birds who fly into them and then Teddy Kennedy did not want them to ruin his ocean view. In other words, you can find something wrong with any proposal if you look long enough. I think wind farms and solar energy are a step in the right direction. There should be significant rebates for those who install solar to off set the initial cost.

Yep wind farms do kill birds that fly into the blades and require servicing and cleaning. I am sure solar panels require plenty of cleaning as well. Similarly there are underwater farms as well that spin based on currents and tidal activity.

Natural gas needs the infrastructure as TG pointed out but it is nothing that cannot be overcome.

Here is an example. This year Bushie ponied up 168 billion as a "stimulus" package. Let's see... I would bet that half of the people on this site didn't even qualify for that money. Meanwhile since the announcement of the package in February the price of oil has gone up what 20%? 30%? Something like that. So here is a package that went to give everyone a couple hundred bucks so they could go buy more crap at Best Buy.

Perhaps it would have been better spent? So lets see, 168B from that... another 300B for the bailout...

Our government seems to think the way out of our spending mess is to... well spend more.... seems like we could be spending it on something that will really help our country down the line.

I think AN’s comment about windmills affecting the global climate is, in part, a spiteful complaint and attempt at a similar comparison to the cry of environmentalists over the greenhouse effect, but from a fossil fuel advocate’s POV. Am I way off AN?

Clean tech that is renewable, continous, and CO2 free (yah yah, shipping and maintaince truck driving aside) without any waste to bury for 20000 years.

Solar
Wind
thermal
Ocean tide
Hydro

Add in some things like biogass (decomposting plant matter and animal wastes) which are a natural biproduct of our lives and basically akin to finding new revinue streams for used products, and we can generate alot of energy without generating really any more CO2.

The reason Pickens and his buddies want to transition to CNG is to keep the current energy buisness plan. A true hybrid is murder to Chevrons current buisness. They want another constant, dependable, and perpetually increasing revenue stream (natural population growth) for buisnesses. Plus, people fork over alot of money on overpriced crap when purchasing gas.

Imagine if we had a true plug in hybrid, where you could get say, 50-100 miles on a charge, before an efficient gasoline powered engine kicked in for the 15 times a year you actually needed it. Our oil supplies would last us hundreds of years, and these people would no longer be the uber rich of the world.

I watched the c-span video at the bottom of the PickensPlan Web page. Pickens says that, out of 85 million barrels of oil produced globally per day, the U.S. uses 21 million barrels. Of the 21 million barrels, 75% is used as fuel in transportation. So about 16 million barrels a day goes for U.S. transportation costs. That leaves 5 million barrels to be used for other things. The 21 million barrels per day ends up costing us about $700 billion per year.

Pickens then talks about electricity generation in the U.S. Currently, 22% of our power is generated using natural gas. Pickens believes that the U.S. can replace this 22% with wind energy by building windmill farms basically in a strip right down the center of the U.S. (that's where the most wind is).

Pickens goes on to say that once wind has replaced natural gas as an electricity generator, we can use the natural gas to fuel our vehicles. He says that wind power is competive cost-wise with other energy sources and that natural gas is about half the cost of gasoline.

However, the catch is that it will take 20 to 30 years to build up the wind-power infrastructure in order to completely replace the natural-gas portion of the power grid. I don't think we have that much time.

I think the better, more immediate solution is a switch to ultra-efficient vehicles like the Tesla (256-mpg equivalent) and the 1-litre car from Volkswagen (~220mpg equivalent).

http://www.teslamotors.com/
http://www.volkswagen.de/vwcms_publish/v...

With vehicles like this and a concerted effort at fuel conservation, we can decrease the oil that goes to transportation by around 90% or so. That means instead of 16 million barrels a day for transportation, we would only need 1.6 million barrels. Combine that with the 5 million barrels used for other things and you have a total U.S. daily demand for oil of around 7 million barrels. I think the U.S. produces right about that much oil currently.

I agree that we should take a serious look at all alternative sources of energy and I hope Congress examines and seriously considers Pickens' plan. We have the renewable wind resource, so we might as well start taking advantage of it. However, I think advances in vehicle technology which make them more fuel efficient is going to beat Pickens to the punch.

I think comparing energy and transportation is comparing apples to oranges. They're two sides of the same coin, but need differing technological methods.

We can't wean ourselves off of imported oil in a stroke, but finding alternative scources to power our houses and buildings will take a load off. There's plenty of innovation in the transport sector, let someone/something else take the lead in finding new power sources in that field.

Just because Wind power isn't a single 'magic bullet' doesn't mean its not a worthy and workable piece of the total energy' jigsaw puzzle' which will be our power sources in the coming decades.

While I don't think that Mr Pickens would win my 'guy I'd like to have a beer with' award, I have to give him credit for thinking laterally - not something you see every day in the Oil Club. He has a lot of experience in the energy sector, and I'm glad that he's thinking beyond 'drill, drill, drill" and exploring other ways to keep the lights on.

Yes, while wind power, especially on the scale that Pickens is envisioning, will have some environmental effect, its still going have a lot less of an impact that the constant shipping, to and fro, of huge quantities of petroleum products.
Or the environmental and human impact of making yet more refineries.
Not to mention the ever present fear of tanker spills, refinery attacks, etc.. both natural and human, in correlation to the massive amount of the stuff we ship all over the world.

So, yeah, its a drop in the bucket - but at least its one drop among many. Enough people like Pickens and his ilk start thinking beyond oil, and the bucket will be full.

Did you even read my whole post? I did say it's a step in the right direction. I just think solar is better, but more expensive. Can you picture when solar get efficient enough that every household will be able to get enough power to run their house and their cars. You would not need any new land for any new "farms" because every house would be self sustained. Solar energy is already being wasted on the roof of houses and buildings anyways. We can also put solar farms in the desert, where there are very little wild life to start with.

I mostly agree with the posts above, especially the ones about pickens and his buddies just wanting to make alot more money off of "the next major energy source". It doesn't matter to me if it is LNG. That is okay. At least we can produce it domestically. Absolutely agree that ultra efficient vehicles are the key to taking a big chunk out of the problem.

Companies like AVA Solar are doing well in advancing the technology.

Also pickens page does provide an interesting forum with people who have alot of experience with solar and wind power.

This is the point I was trying to make... 30 years ago we could have started this initiative and now we would not be in the mess we are in. The problem is that the private sector didn't care because it was not cost effective for them. Similarly the government had no interest because they didn't have to care. Now we are in an intractable mess so it is now cost efficient for those who have all the money to build up the new platform, (whatever it may be).

Whatever way we get there, whether we use an LNG bridge for LNG vehicles, solar, wind, whatever... it is going to be provided by big oil with more then likely taxpayer money.

Which at this point is fine with me.

TheBreeze is spot on, vehicle technology and true plun in vehicles is where the next big move will be. Speedingpullet is also correct and it's the combination that will solve the problem, not one thing alone. Both your posts reflected exactly how I think. AN, solar technology is advancing to solve the cost issue, in leaps and bounds. Residential solar is moving towards clear, spray on solar generation that is cheap, is not something bulky and heavy on the roof and cannot be seen (think thompsons water seal that generates electricity). Same tech can be mixed into vehicle paint, that is where I see it heading. It will be exciting over the next ten years to see who wins the "space race" of our time but the good thing is, at least the race is finally on.

SD, I'm with you, we aren't environmentalists, we are economics geeks and we are spending our time learning about alternative fuels, that is indicative of the current change in attitude in this country.

T Boone Picken's plan definitely has some merit.
Although converting to natural gas autos is problematic from infrastructure and car technology standpoint, and it will take longer than 10 years to just get the infrastructure up.

I personnally have chosen to live near commuter rail an have a very fuel efficient family car.

Household Solar power with Net metering and a plug-in hybrid looks very intriguing to me. Upfront expense is high, but with enough incentives such as tax credits, it becomes economical with payback period of maybe 5-8 years, depending on size, orientation of solar array, etc.

With net metering, during the day your meter essentially runs backwards. You are feeding excess energy into the grid and SDG&E is crediting your account. At night, you are charging up your battery. In California, the best you can do is zero our your monthly electrical bill. In some states, you can actually get positive credit at end of month.

You've essentially become a micro power company. With new utility variable rates, that charge higher rates during peak usages times, you do even better. Generating/selling back to utility at higher rate during day and consuming at high while you charge your car.

I have been on the hunt for investments in alternative energy companes, especially ones with defensible intellectual property. All it takes is a breakthrough in semiconductor solar cell energy efficiency and the cost of Solar drops, perhaps on par with Coal. Famed venture capitalist Vinod Khoshla has a whole fund focused on alternative energy.

I think T Boone has got to throw Solar into the mix, althought it is more of a regional play for the Southwest US.

Bubblesitter

I agree Bubble...SDGE sucks right now because they will not officially make a purchase of electricity from microproviders unless the amount meets a certain minimum. I believe that amount of electricity would take approximately 20 acres when translated to land use. That is re-freeking-diculous. Anyways hopefully that sort of stuff will be changed.

I do agree it would be nice for pickens to officially add solar to his plan. The only problem I see with his plan or anything in the plains states whether it is massive solar or wind farms is the absolute 100% probability of tornadoes. Solar farms in the southwest are appealing as places like AZ, CA and NM are not as susceptible to that sort of extreme energy.

Pickens knows his oil business!! I saw an interview with him on CSPAN about 1.5 years ago and he said then that gas would hit at least $4/gallon in a year. And he also said that we're at or passing peak oil production. (Chevron and Exxon recently have announced they will not increase oil production for at least the next two years.)

So it's no wonder to me that he's looking at alternative production of electricity. We have built a massive infrastructure for electicity and it's about the cleanest energy we've come up with.

We just need to stop using petroleum to make energy and move vehicles. Solar, wind, hydro, geothermal, tidal, nuclear, etc..will all start to look more "cost effective" as production of oil starts to fall and the global demand increases. Might as well get started on it now. It wont happen very fast.