I am just.... speechless.

And the Congress walked away from the Energy Bill??

Everyone needs to send mail to your three Congress-persons and shout at them, loudly, to move to fix this.

I have a couple of comments and questions.

You said "In the last 41 months, all consumers, including a lot of families with fixed income, became the victim of high natural gas prices. Manufacturing workers, who lost their jobs to overseas manufacturers with cheaper natural gas, also became the victim. The jobs lost may never return."

While I agree, what about the other side of the economic equation. Surely someone - or lots of someones - benefited by the increase in revenue those increased prices produced. Wouldn't they have a vested interest in working to keep supplies constrained so that their investments in gas supply facilities would be more profitable?

You also said "The blame for these high prices does not rest on the oil and gas companies, it rests mostly on federal and state policy makers. Congress and states must work together to break the impasse between the environment and the need to increase supplies of natural gas." Who do you think influences the decisions of those policy makers? Do you really think that they are acting in support of illogical, fringe groups or do you think that they just might be listening to the people that provide campaign funds?

Finally, have you even heard of the fact that nuclear power is available, reliable, cheap and clean, or that it currently produces more than 20% of the nation's electricity with a fleet of plants that was built during a brief 20 year period?

Rod Adams www.atomicinsights.com www.atomicengines.com

Excellent points Rodney. Given that natural gas production on this continent has already peaked, one has to wonder at the idea that we should be furthering our reliance on fossil fuels at all. LNG imports are set to increase substantially over the next 20 years; and why are we still building and commissioning new NG power plants?

The items that need to be addressed in a National Energy Policy are obvious, albeit politically unpopular. Nuclear energy has to be moved back to the forefront of our thinking. Renewables certainly have their niche markets and intrinsic value, but the reality of inherent common sense in large scale committment to nuclear power needs to be recognized.

Given the nature of government, it is far more likely that a National Energy Policy will not take the steps needed now to insure continued economic prosperity, but will wait until the situation becomes painful enough that taking politically unpopular steps such as putting us on course for substantial nuclear generation is more palatable.

I agree wholeheartedly that the natural gas price increase is a huge problem with broad implications for our country. Unfortunately, while it was cloaked in the language of energy independence, the so-called Energy Bill was not a serious attempt to attack the problem. Had all that money been passed around to the various favorite interests of the legislators, the increased quantities of natural gas made available to the market would not have solved the problem you describe.

Now is the opportunity for advocates of clean coal to prove that it can be a cornerstone of our future energy mix. The smattering of DOE-sponsored clean coal demonstration projects don't appear to me to be a serious effort on the part of the coal and electric generation industries. I think that clean coal is positioned to fill the gap brought about by the maturing of the domestic natural gas supply, but the jury is still out on whether the industry is capable of meeting the performance and environmental requirements of the 21st century.

Rick Heimann (rheimann@pwius.com)

The observation of oil prices rising less than natural gas is only due to the still considerable influence by the price depressing OPEC cartel. The demand of affluence by the growing middle classes in China, India and other developing countries will soon swamp traditional predictions of the longevity of fossil fuel resources, including the myth of centuries of inexpensive coal usage. To give one example, China has sold more than one million civilian cars domestically in one year for the first time in its history, and still has only 2 cars per 100 people. You do the math.

U.S. imports of natural gas are breaking 10%, and are already at 3% for risky and vulnerable liquified natural gas products from overseas, mainly OPEC suppliers. The world continues to burn nearly a billion barrels more oil than is discovered every month or less in spite of increasing and increasingly sophisticated exploration and exploitation. Canada is beginning to export coal to China; very likely the U.S. will do the same.

The Fossil Fuel Party is ending and soon the grim bill will arrive. Only serious and concerted efforts toward efficiency and renewable energy will enable us in the U.S. to maintain our standard of living. Competing with the rest of the world for increasingly scarce and polluting resources will not keep our affluence afloat much longer.

Mark Burger

Clean-coal (e.g. coal gasification) can meet and exceed reasonable environmental limits and simultaneously fill the demand/production gap for natural gas, reducing price pressure on NG, and providing an abundant, reliable, domestically productive energy supply that won't cripple our economic engines. However, the environmental 'superiority' rhetoric of NG for the last 15 years has been so effective that the public has become ignorant of the accesible benefits of clean coal for both the environment and the economy. Nuclear energy can also play a role but the US public is still captivated with post-3 Mile Island/Chernobyl fears and uneasy with the storage challenges posed by US-adopted nuclear processes while other nations move forward with breeder reactors with less volumetric waste consequences. A public education process is a primary step for both coal and nuclear.

The energy "policy" of the U.S. continues to be self serving to the energy companies, and not for the benefit of the country. Alternate energy sources should be developed, but I believe only a majority nuclear option will provide the stability and security that the U.S. needs.

I think they are listening and reacting to both of these groups, and probably even more to the polls. And very few of these influences have any reasonable perspective on the issue. Our leaders are not leading, they are following ... the path of least resistance.

To quote Leo Hess: "Given the nature of government, it is far more likely that a National Energy Policy will not take the steps needed now to insure continued economic prosperity, but will wait until the situation becomes painful enough that taking politically unpopular steps such as putting us on course for substantial nuclear generation is more palatable."

That is about it in a nutshell ... the politicians will not react until it becomes politically advantageous. So the soccer moms are making national energy policy ...

Also, what is the effect on job creation in those industries that manufacture energy efficiency products like new more efficient appliances, insulation, double glazed windows, etc.? The housing industry might be impacted as well as older homes fall out of favor relative new more efficient homes.

When a regulated monopoly structure was the norm, companies had much more incentive to build assets with higher construction costs and lower operating costs - e.g. nuclear and coal-fired. Returns on these assets could come over longer pay-back periods, with virtual certain of stranded cost recovery. With a deregulating market, that structure was llost as customer bases, and cash flows, became much less predictable or certain. Longer payback periods on large up-front fixed costs are simply too risky. Factors which made other types of capacity less attractive, such as the loss of faith in nuclear and the environmental problems associated with coal, only exacerbated the problem.

The bottom line is that the proliferation of tens of thousands of megawatts of natural gas fired capacity additions in this country in the last decade, and the reliance on these assets in meeting increased power demand, has also contributed to higher gas prices.

High prices due to market manipulation are short-term, don't last, and the greediest perps are always exposed.

The most egregious market manipulation comes from the government. More government involvement skews the market response. Shifiting policies prevent long-term solutions - Less is better. The longer politicos can keep their hands off the controls (market manipulation) the more sustained the corrections will be. The chickens always come home to roost. All the market manipulation by well meaning regulators to keep the greedy oil companies controlled for the poor consumer will only result in shortages, higher prices or rationing. We'd be better off with no new energy bill and let the market make corrections, instead of making new policy, even if it corrects current barriers to new energy supply, because the cure will be worse than the cold.

IMHO - Nuclear power is a great concept - but it's not a practical answer.

IMHO - Nuclear power is a great concept - but it's not a practical answer.

I would be interested in more details on why you think that a zero emission technology with fuel that costs less than 1/20th as much as natural gas is not practical.

Uranium fueled power plants are currently producing more than 20% of the electricity in the United States. Interestingly enough, they produce twice as much energy every year as did all of the power plants in the country did in 1953 - the year that President Eisenhower announced his atoms for peace program to the United Nations.

Sounds far more practical to me than to think that we can conserve our way through the future or that solar and wind (both of which have been known and understood for several thousand years) will save the day.

Rod Adams www.atomicinsights.com www.atomicengines.com

The electric industry, in its efforts to function in competitive markets, designed a market that promotes NG generation because of its short ramp rate. This allows NG units to respond in many more markets than a coal fired or nuclear plant, which gain efficiency in base load, continous operation.

Gas producers, like other energy companies, paid to much attention to quarterly financial results rather than long-term goals. With the colapse of stock prices due to fraudlent reporting, over stated earnings, and accounting scandals, money for exploration all but vanished. Consequently, production of new gas is modest at best estimate. Imported gas has much less risk associated with it.

Our energy problems cannot be resolved over the shortrun. This is a long-term problem requiring long-term solutions. This country started trying to resolve these problems in 1973 and acted in earnest in 1978 with significant legislation. Markets changed, prices fell, and the log-term goal and vision were lost to the 90 day bean counters. So, here we are in 1973 again.

A good example of that is when the Ontario energy market opened up a few years ago and since some big power plants were down for the long term, the Canadian’s had to buy energy from the U.S. at a higher price than they were used to. With those price increases there was new incentives for efficiency. Unfortunately, the Premier Eves was worried about the next election and chose to roll back and freeze prices. This action alone destroyed most of the new incentives to conserve and find alternate sources of energy. At the same time the Canadian government was concerned with achieving the Koyoto goals they agreed to – go figure.

As you probably know the Premier Eves was not re-elected and the new Premier McGuinty has since done some necessary things in an attempt to stop the government’s bleeding including raising the energy prices closer to actual market value, which again will stimulate conservation.

In summary while the higher relative cost of energy in the short term may be painful, it will drive us to be more efficient and motivate innovation.

Simple ...one resource means it can be open to manipulation and price gouging by distributors and producers. No surprise. A real energy bill that actually looks to develop renewable sources of energy would actually make the US much more energy independent. Why isn't Congress legislating R&D dollars to develop a diversified portfolio of renewable sources of energy.

If the Energy Bill you referred to passed it still would not address the most critical issue this country has been facing for 25 years.

Happy New Years

If unfettered markets alone could solve these problems, they'd already be fixed. George Soros has said that free markets are amoral, uncaring about societal needs. For example, we see "offshoring" of jobs badly needed in the US, in the name of competitive advantage or corporate survival. But the costs of unemployment to our nation (more burdens on social services, fewer well-heeled consumers to fuel economic advancement) aren't adequately accounted for by our economic scoring system. They get relegated to our political and regulatory processes for solution.

If technology alone was the issue, the problems would already be fixed. As Paul asserts, the fault is not primarily with oil and gas companies. They are mostly doing what comes naturally to capitalists - maximizing profits. Again, the problem is a regulatory and political one.

I agree with Paul that we are getting hammered by increasing energy prices. (I fear that gas at $2 or even $3 or $3.50 per mmBTU is a relic of the past - and so does Alan Greenspan.) But the market alone will not provide the cheap, abundant energy Paul's constituents seek. There's no economic incentive for the market to invest to provide "cheap" energy (at lower than competitive prices) to serve the societal needs of consumers, workers, and industry. Similarly, the deregulated energy markets have shown that there is little incentive to provide capacity to serve more than baseload. Instead, strongly concentrated economic interests such as the energy industry, with their huge lobbying clout, should be expected to exert their strength in their own selfish interests. And they do.

Even if concentrated economic interests are restrained from exerting their influence (this seems unlikely), there are still problems - conflicting political interests, environmental concerns, and ideological polarization.

Conflicting political interests - In the US, 10 states produce more energy (per capita) than they consume, and export energy (these states are WY, AK, WV, LA, NM, ND, MT, KY, OK, TX). The other 40 states import. Recent difficulties with states balancing their budgets highlight the situation. In energy-exporting states, energy production and high energy prices provide jobs and tax revenues that alleviate many political problems. In contrast, energy importing states wind up subsidizing jobs and tax-supported services in producer states - while fighting deficits and cutting services to their own constituents to do so. The energy exporting states, although a minority, have a more organized, focused constituency than the importing states - and it shows. A cursory check of who's who in US government shows that people from energy exporting states have most of the power positions. Expecting these executives, legislators and regulators to heed Mr. Cicio's concerns is not realistic.

Lower energy prices, or anything that smacks of distributed generation that happens outside producer states, is not favored by the current national political power structure. Unless the energy importing states recognize their common interests and focus strongly on achieving them, we're probably stuck with the status quo.

Environmental concerns don't need elaboration - they're in our faces every day. But there's no generally accepted way of incorporating environmental externalities into energy prices. Indeed, free-market ideologues advocate that any regulation or political attempt to price environmental (or social) externalities into energy is sinful. That brings us to ideological polarization.

At one extreme, we have advocates that think unfettered free markets will fix everything. At the other, we have environmentalists who have elevated their creed to the status of a religion, accepted on faith rather than based in fact. [This latter problem may be partly in response to the current political dominance of energy exporting states and ascendancy of polluting industries. It's easier to sell viewpoints with sound bites than with arguments that take more than ten seconds to express, let alone understand. This makes selling environmentalism as a religion easier than selling it as a complex economic or health proposition.]

These folks don't pray in the same church - and this religious war is being fought with sound bites, money, and political influence, not reason. Worse yet, there seems to be little middle gound ("If you're not with us, you're against us" - George Bush; "bipartisanship is like date rape" - Grover Norquist). Unless leadership emerges that can arbitrate between these groups AND recognize needs o

World political and economic influence hasn't been mentioned in comments yet. But in "GeoDestinies", Walter Youngquist asserts that both political and economic power on the world stage rely on domestic energy production. The British Empire led the world when it produced more than 50% of the world's energy from its coal mines before the oil era started. The US led the world during the early to mid 20th century because of domestic oil supplies. Now the Middle East is trying to call the tune.

Clean coal technology, IGCC (Integral Gassification Combined Cycle) offers the chance of becoming less reliant on foreign energy suppliers. In some forms, it even offers the chance to alleviate coming oil shortages and sequester CO2 (see, for example, Rentech's website, at http://www.rentechinc.com/pdfs/CEC-CARB%208-19-03%20Final.pdf , page 5 of slide show).

But producing clean liquid fuel and sequestering CO2 while simultaneously producing electric power are NOT inherent to clean coal technology. Economic considerations suggest that these environmentally desirable features (especially CO2 sequestration) will not happen unless they enhance price competitiveness. The Bush administration has shown that it supports keeping old coal plants running by waiving "new source review" and effectively repealing clean air act provisions. It has also rejected the Kyoto Protocol. In the face of such evidence - preservation of "old capital" instead of willingness to commit new capital to advanced technologies - expecting "clean coal" to be implemented in its environmentally benign form is unrealistic without a change in administration.

We are clearly running out of fossil energy other than coal. Meeting this challenge will require political will. China's Mao said political power grows from the barrel of a gun. I think it also grows from unaffordable energy prices, cold houses and unemployed workers. Until we reach extremes in those regards, I suspect we'll be gritting our teeth.

Short term future should swing heavily to coal for source of transportation fuel (maybe Fischer-Tropsch here) and nuclear and wind for electricity. Eventually should move to total nuclear energy and wind based energy economy with either thermal hydrogen production using the Iodine process; biological hydrogen production (Melis); hydrogen from IGCC coal gasifiers; or similar.

One interesting point is the recent spot prices of Natural Gas are already going above the point where hydrogen from several of the above methods would be cheaper to produce and supply. Only thing remaining is that they need to stay up there long enough for investors to gain confidence in a payback. That's likely the only thing that matters, governments should just stay out of it.

Len Gould: I wasn't advocating that natural gas to diesel fuel is a general solution, although it is relevant in making use of otherwise stranded gas. Fischer-Tropsch diesel from coal is a more general solution for transportation fuel over the next couple of decades, if done in an environmentally responsible fashion. I mentioned Rentech more in the context of the 2400 MW Clean Coal Power generating plant planned in Illinois. I think that wind & nuclear or fusion could be the long term winners.

In my prior comments, I wasn't trying to suggest the ultimate solution, just that building a bridge to get to that ultimate solution, whatever it is, has some serious political obstacles.

In the context of Paul's objectives (avoiding economic damage, preserving jobs & domestic industry), we need to bridge past the period it takes to ramp up LNG imports, get clean coal going, build nukes, etc - all long lead items. The problems we face in the next five years make the recent California mess look like a Sunday School picnic. About the only fast-response strategies (other than more production efforts) I can see are energy efficiency and wind. But we aren't doing nearly enough with those, because of political obstacles.

Les Lambert

I have often heard that "perception is reality". My normal answer is I guess I just perceive that I am cold and need heat or that I cannot carry my groceries home without some assistance from external energy sources. I also must simply perceive that it is a long way from China to the US or from the US to Europe.

My views of atomic energy colored by the fact that I once spent a few years in charge of engineering operations for a vehicle propelled by a steam plant heated by fission. I also know of several far smaller reactors than that one that have been operated quite in very rapidly moving vehicles orbiting the earth.

There is an awful lot of oil being burned in vehicles large enough to be powered by atomic engines using technology proven almost exactly 50 years ago. With a few technical tweaks and use of better heat engines, there is an even broader possible market.

Reality is reality.

Rod Adams www.atomicinsights.com www.atomicengines.com