Friday, August 15, 2008

Energy Crisis Resolved!

From the Desk of Joe Rollins

It looks like the energy crisis has been left up to me and Paris Hilton to resolve… The complete incompetence of our elected officials being recapped on the nightly news only leaves me completely outraged. I’m talking about both Republicans and Democrats here – the incompetent are both in Congress and in the Executive Branch.

In recent years, politicians out of Washington, DC have become so dogmatic that it is paralyzing the real issues concerning average Americans. The energy crisis issue, in particular, is one of national importance, and it’s obvious to me that those now responsible for making decisions in Washington never had to try to buy gasoline back in 1973.

I, on the other hand, vividly remember what it was like to try to fill up the gas tank in 1973. Back then, even if a filling station had as many as seven or eight pumps, most of them had “No Gas” signs posted on them. It wasn’t a matter of cost – there just wasn’t any gas to purchase. Basically, America was facing a gas shortage because the Middle Eastern countries, in concert, had placed an embargo on shipments of crude oil to the United States.

In retrospect, this was a blessing in disguise. Due to the conservation that was required, the cost of oil was forced down as the Middle Eastern countries suffered a significant economic blow because of their unwillingness to sell crude oil to the U.S. However, the pain was equally as severe in the United States, and as such, the U.S. suffered a severe recession from 1973 through 1975. Once the embargo was lifted, the United States entered an era of hyperinflation. I’m assuming that a few of you remember when Georgia’s native son, Jimmy Carter, was in Washington and inflation was at 12%...

Compared to today, we’re not dealing with anywhere close to the same issues as those we faced beginning in 1973. There’s more crude oil being produced in areas outside of the Middle East, and contrary to the proclamations of the various candidates running for office, providing oil out of the strategic oil reserve would accomplish nothing. There is no shortage of crude oil anywhere at the current time; we are just suffering from the high price of the crude oil.

The United States’ reliance upon foreign governments to provide us with crude oil has had a dramatic and potentially devastating effect on us during a time of war. Can you imagine if we couldn’t purchase crude oil from unfriendly governments right now? A vast majority of the largest producers of crude oil in the world are possible enemies of the United States, and they could potentially withhold oil from us which would be devastating to a war effort. The current conflict between Russia and the upstart province of Georgia only reemphasizes that possibility.

For several reasons, it was a breath of fresh air to see Paris Hilton’s spoof campaign ad that circulated the Internet last week and hear her resolution to the energy crisis. Hers was done in jest, but my idea for resolving this mess is for real:

Regardless of who is elected to be our next President, a solution to the energy crisis must be of the utmost importance. Our new President should declare that it’s in the best interest of the United States to pronounce energy independence from the rest of the world. By this, I don’t mean that we’d need to completely eliminate our need for crude oil; rather, our focus should be on not purchasing crude oil outside of our own borders.

Obviously, this solution would include drilling for oil within our own country, furthering wind and solar power efforts, and exploring new technologies that have yet to be contemplated. This would be a massive financial undertaking and it would take the best minds in the world to create the technology and infrastructure to ensure it works. Do you think this is only a pipe dream? Not me! Here are some similar examples of how this has worked for us in the past:

In a speech before Congress on May 25, 1961, President John F. Kennedy declared the U.S.’s “space race” between the Soviet Union, with the goal of successfully sending an American to the Moon before that decade’s end, saying:

“First, I believe that this nation should commit itself to achieving this goal, before this decade is out, of landing a man on the Moon and returning him back safely to the earth. No single space project in this period will be more impressive to mankind, or more important for the long-range exploration of space; and none will be so difficult or extensive to accomplish.”

At the time, everyone thought that Kennedy’s speech was based solely on political rhetoric, and I wonder if Kennedy even believed the same. In 1961, the technology did not exist anywhere in the world to accomplish such a lofty goal – a goal that was made even more difficult by Kennedy’s challenge for it to be accomplished within the decade. Nonetheless, Kennedy’s objective was reached in eight years on July 20, 1969, when Apollo 11 safely landed on the Moon and Neil Armstrong took his infamous steps on the Moon’s surface.

I recently visited the Smithsonian National Air and Space Museum, where they actually have some of the original space capsules on display. Compared to today’s airplanes (not spacecrafts), they looked like toys. It’s difficult to imagine that the astronauts were comfortable exploring space in a tin can strapped to a rocket.

The United States was able to accomplish this incredible goal because of governmental involvement. The government initiated a massive spending of money on technology, which allowed the goal to be realized. NASA is given credit for creating miniaturized computers, which, prior to that time, did not exist. Due to NASA’s insistence, computer miniaturization was created making space travel possible.

In time, NASA’s technology was made available to the private sector, creating a massive wave of new technology out of the United States. There’s a reason why the U.S. continues to be the worldwide leader in computer technology, and while it’s true that many countries duplicate our technology, the U.S. is ultimately responsible for creating the technology in the first place. Furthermore, nearly all of the major software developers in the world are based in the United States. In a nutshell, the U.S. government’s enormous commitment to the “space race” not only allowed us to succeed in landing a man on the moon, it also created a technology bonanza in this country that we continue to enjoy today.

The United States could do the exact same thing regarding the current energy crisis: The government could employ the engineers and scientists to create the technology we need to realize that goal. As we go forward, this technology could be turned over to the private sector for free to enjoy and exploit. There’s absolutely no question that in a 10-year period, the U.S. could be 100% energy-independent from the rest of the world. Of course, this can only be accomplished on a bipartisan, common-goal basis. Unfortunately, based on what I see being reported today, our elected officials in Washington are wasting our time and are endangering our security with partisan politics. Worse than all of that, almost zero has been accomplished regarding energy in the last 30 years.

Just to solidify my point, here’s another example of how our government has worked together in the past for the benefit of the country as a whole:

In 1941, the U.S. government along with the United Kingdom and Canada entered into an initiative to develop the first nuclear weapon (atomic bomb) because of fears that Nazi Germany had been developing its own nuclear weapons since the 1930’s. The U.S. hired the best engineers and scientists money could buy to accomplish this goal, many of whom were foreign born but with a vested interest in harnessing the technology.

From 1941 through 1946, the Manhattan Project provided the technology necessary to ultimately create the first nuclear weapon, and the project employed more than 130,000 people and cost nearly $2 billion. Based on CPI, this would cost us $24 billion in 2008 dollars, which is actually a relatively small amount compared to the billions and billions in pork barrel spending by our inefficient Congress today.

Due to the government’s intervention and funding of the Manhattan Project, a nuclear weapon was successfully created within five years. We obviously know the effect these weapons had on our outcome in World War II; the U.S. prevailed and hundreds of thousands of U.S. soldiers’ lives were spared because of the Manhattan Project. While the merits of a nuclear weapon are debatable, the technology we garnered is indispensable to our futures. Because of the technology created for a nuclear bomb, we now have the ability to generate clean and safe power to the entire world.

Kennedy’s “space race” and the Manhattan Project examples above illustrate that if the U.S. government commits its resources and personnel to accomplish a goal on a bipartisan basis, they can be accomplished. Based on my research, it’s totally unlikely that the United States would be able to furnish 100% of its energy needs solely from drilling within our borders and off the shores of this country alone. However, doing more domestic oil exploration than we do today along with a massive undertaking of new technology that some of us haven’t even contemplated is absolutely crucial to resolving the energy crisis.

I watched a special the other night regarding a new hydrogen-fueled car manufactured by Toyota, which emits water vapor and no carbon monoxide. Unfortunately, this vehicle is unlikely to be sold in the U.S. in the foreseeable future due to a lack of hydrogen fuel stations in existence today. Small obstacles such as this amount to nickels and dimes and warrants governmental intervention. Literally thousands of hydrogen-based fuel stations could be built within six months if only our government would get involved.

I hope that one day I’ll look back on this blog and say, “I told you so!” However, I fear (and expect) that due to the inefficiencies, incompetence and the unwillingness of our leaders in Washington to compromise, it’s more likely that I’ll instead be saying, “It was an opportunity lost.”


Bill said...

The next time someone asks me my opinion on this issue, I'm sending them straight to this blog. I couldn't have said it better myself.

Rollins Financial Advisors, LLC said...

Thanks for your comments, and we are glad you enjoy the blog.