Much has been dicussed here at Dkos about peak oil and alternate enrgy sources. Here is a brief history of alternate fuel development in the USA from the perspective of one engineer.
It was the record hot summer of 1980 and I was on my way. I was a junior in Chemical Engineering who had scored a summer intern job in the Alternate Fuels R&D group with a major oil company in Tulsa, OK. These were heady times for any aspiring "ChemE":- the Iranian revolution in '79 had sent oil prices soaring to about $85/bbl in today's dollars. The Soviet invasion of Afghanistan later that same year was further proof of the folly of the US being dependent on oil fro a distant and unstable part of the world.
A fellow engineer, President Jimmy Carter, had announced a massive federal program to replace foreign produce "Synthetic Fuels" from North America's abundant coal, oil shale and tar sand resources. Suddenly, a career in Chemical Engineering seemed not only an excellent career choice but also imbued worth a certain importance to national security and prosperity. (If Carter's program seems a little carbon intensive by today's standards, remember that it wasn't until 1981 that an earnest young Congressman from Tennessee held the first hearings on the threat of Global Warming.)
Then the most absurd day of my life arrived. At midday one July day I left the offices were I had been evaluating such things as the use of steam to extract oil from the Athabasca tar sands to go the nearest post office to register for the military draft. It wasn't my idea but Senator Nunn had convinced President Carter to reinstate draft registration as a "signal" to the Soviets not to jump form Afghanistan invaded the Persian Gulf to seize the oils fields. If it ever came to a draft, I wondered, would the government think it more useful to develop energy sources here at home or to have me tote a rifle in the Persian Gulf?
Resumption of the military draft never happened but the vaunted new Synthetic Fuels industry never happened either. Reagan defeated Carter in the fall of 1980 and the Synthetic Fuels program was quickly scaled back. After all, if such a program had succeeded it might have disproved Reagan's frequent assertion that "government was the problem, not the solution".
The high oil prices for a time spurred some additional oil production and conservation and within a year or two the price of oil had a fallen back to near pre-Iranian revolution levels. The oil exploration industry underwent a brutal retrenchment from its '79-'81 growth; at least a half dozen of my graduating ChemE classmates had oil industry job offers rescinded before they could even report for work. Other were let go in their first year out of school. Chemical Engineering was displaced in the following two decades by Computer hardware and Software engineering as the cutting edge technical discipline.
As for myself, I missed the great petrochemical wipeout of '81-'82 because I had already decided to go onto graduate school to position myself to be a research engineer in the alternate fuels industry rather than a production engineer. By the time I completed my degree in '85 the best opportunity was in developing materials for the consumer and medical products industries. To be sure it has and is been a good career. I have been able to travel all over the world and have enjoyed more job security than most engineers in US manufacturing. Yet, designing better components for protective apparel or cosmetic wipes certainly lacks the sense of mission and importance of that long ago summer intern job or my college and graduate school research projects into coal liquefaction and energy efficient distillation..
For a generation since the'79-'81 oil crisis the "free market" was more often than not able to deliver energy supplies at a reasonable cost on world markets. But in the past three years the free market seem unable to cope with the combination of the inevitable peak oil, constant Middle East instability, and the surging demand for oil in the emerging economies of Asia. It is not at all clear that the free market forces that resolved earlier energy crises we be able to pull or chestnuts out of the fire once again.
One thing is clear, however, the Bush administration since 2003 has pursued a policy of attempting to secure oil supplies by American toting rifles in the Persian Gulf rather than Americans using their brain power here at home to peacefully secure our nations energy future. A formal draft was never implemented since that summer of `80 but instead we have had a de facto draft comprised of "stop-loss" orders and the calling up of National Guard units that had not left our shores since the Korean conflict. The failure of the military method of securing our energy future can be measured with numerical precision - Oil was about $26/bbl when we invaded Iraq and it has risen to over $75/bbl in recent weeks.
What we don't have from the Bush administration is a purposeful national policy to free ourselves from foreign oil by peaceful means. Efforts by Gov. Schweitzer of Montana are surly inspiring but the question remains if a state led effort can develop sufficient momentum to create from scratch an industry that is both very capital intensive and that entails considerable technical risk to its initial entrants.
A wise government policy would realize that the greatest barrier to commercializing new energy sources is not the formidable technical innovation step but it is the risk that a sudden drop world energy prices would render the alternate energy investment worthless and the company executives who recommended that investment would be out on the street. This means that he projected price of oil and natural gas 5 and 10 years from now is the key driver in the investment decision for a large scale alternate fuel facility.
The management of North America's energy industries are made up of those who were fortunate enough to survive the meltdown of the early 80's that stunted the careers of so many of my classmates. Few will want tempt fate a second time particularly with looming college expenses for their children. Call it lack of courage, call it what you will but a brand new industry where the ante is in the hundreds of millions of dollars per full scale production facility is not going to start up on its own.
Jimmy Carter realized this a quarter of a century ago when he proposed that the US government seed a "Synthetic Fuels" industry. The necessary jump start here in the 21st century need not be a government funded plant but might better take the form of a minimum price guarantee (adjusted for net carbon footprint) for the usable output of a alternate energy facility for a period of time sufficient for the investor to recoup a reasonable portion of their investment.
I have been absent from alternate fuel research for so long that I am no longer an authority on exactly which alternate energy form is best but I have in my career experienced first hand how decisions are made in a capital intensive industry and I can tell you that leaving things to a "free market" in the tradition of Reagan and Bush will guarantee that we will never have a domestic alternate fuels industry until several years after a energy driven crisis has devastated our economy.
It is past time for the leadership of the Democratic party to advocate a program that will take that $100 billion per year we are wasting in Iraq and to use those funds to jump start a domestic alternate energy industry.
Sam