- by New Deal democrat
This week, like last week, starts out with a few days of no meaningful economic data. But there is still much to talk about. So let me spend a little time talking about the disastrous Iran war and the tiny silver lining of energy independence which is likely (after much pain) to finally result.
First of all, it appears that Iran is benefitting from Chinese tech and Russian targeting. Apparently another US military base in the Mideast, this time in Jordan, has been seriously damaged, including destruction of some fighter jets (none of which the current Administration wants to tell the American people about.
Just as importantly, the other side has learned some lessons from Ukraine’s use of drones and ballistic missiles to identify chokepoints and inflict maximum economic damage. In particular, within the past week Iran’s Houthi allies have obtained another choke point at the southern end of the Red Sea, and - aided by pinpoint targeting - have put Saudi Arabia’s east/west pipeline designed to circumvent the Strait of Hormuz out of commission. The Saudis have indicated it will be back up and running in a few weeks, but of course I hear that Iran has more missiles as well. Anyway, as a result, Gulf Oil has all but been shut off:
This is reminiscent, by the way, of the Ottomans’ strategy of “slitting the throat” of Constantinople by cutting off the ability to ship through the Bosporus. Hence, the title of this piece.
Meanwhile the US strategic oil reserve is at its lowest level since 1982:
Oil prices are back over $100/barrel and are close to their Iran war high:
And retail gas prices are back over $4/gallon. While diesel prices, which affect all the trucks which bring consumers all their goods, hit an all time high of $6/gallon last week:
While I don’t pretend to have a crystal ball about what might happen in future months, the current US Administration is going to remain in power, and just as incompetent, for the next two years as it has been for nearly the last two.
Fortunately, there are a number of things that homeowners in particular can do to all but eliminate their gas and oil consumption, and large efficiency gains have been made in almost all of them. So here are some options:
1. Install rooftop solar:
While this doesn’t work everywhere, and some HOA’s have rules limiting its use (which should be overruled legislatively), modern solar panels are much more efficient and much less expensive than those of even 10 years ago. An average rooftop installation can cost between $20,000-$30,000, but has a lifespan of up to 25 years, and savings pays back its installation costs within about 10 years. In the meantime, use of rooftop solar all but eliminates electricity bills, which average only $10-$30/month.
2. Consider small windmills as a supplement:
There’s a reason windmills haven’t been installed as much as solar. While installation costs can also run into the $1,000’s and even be over $10,000, the electricity generated is typically much less than solar sytems, and is more intermittent. Also they need to be installed high enough above the ground or rooftop to take advantage of the wind. But for areas that typically see wind speeds over 5mph, they can be a useful supplement. And they aren’t huge: the typical wingspan is on the order of 5-6 feet.
3. Install a modern heat pump. The knock on heat pumps used to be that they did not work in cold conditions lower than about 35°F, making them a poor alternative in areas with cold winters. But modern heat pumps are much more efficient, capable of pulling heat out of outdoor air as cold as 5°F, and in some cases even lower. Further, most can be installed without ripping out existing HVAC ductwork and make use of some existing HVAC hardware. Obviously installation costs vary greatly, but the average is about $10,000. The time it takes for the system to pay back installation costs also varies, but is typically on the order of 5 to 10 years. Again, the system can easily last 15 to 25 years, so it is still a net positive.
4. Consider an PHEV if not an EV. Plug-in hybrids have several advantages. They are full-fledged EV’s for typical daily in-town driving, and hybrids for longer trips. Further, they can fully charge overnight on a regular 120 volt line, so there is no need to expensive installation of higher voltage lines. And most hotels now have charging stations in their parking lots, obviating any problem with recharging on long trips.
One thing to keep in mind is that auto dealers are not idiots and are aware of this as well. Thus the price for used EVs and PHEVs were bid up at the Mannheim Auto Auction earlier this year, and can be expected to rise again:
(h/t Wolf Street)
All of the above ideas come with substantial costs, although in the long term they are net positives. And if there is ever an outright shortage of gas or oil, as there was several times in the 1970s, the homeowner or driver who has converted to alternate systems won’t particularly care.
Finally, there are several things to consider pushing any subsequent Democratic Administration in 2029 (should we be so lucky) to undertake.
1. Mandate that vehicle fleets be fully hybrid or electric in 2 years, and PHEV or EV in 4 years. This is similar to the mileage targets that were set for motor vehicles beginning in the 1970s after the first oil shocks. Congress by law established minimum requirements, which were technologically achievable, and then let the automakers set their own courses to achieve them. The point of any new Congressional target should be to all but eliminate reliance on gas as a fuel for vehicles.
2. Treat the interstate transmission of electricity the same as interstate transmission of gas. When an energy company wants to run a new interstate line, States in the right of way do not have veto power. One federal approval is enough. By contrast, transmission from, say, the sunny Southwest or the windy High Plains or mountain States to population centers several States away requires approval from each State along the path - which is almost impossible to obtain, and has derailed many plans for much more energy efficient sources of electricity.
Both of the above enactments should have sunset dates of January 20, 2033, both to encourage quick construction and to present any subsequent GOP Administration from either derailing the plans or corruptly rejiggering them.
Unfortunately, for the next 2+ years, we are on our own; but as I have described above, there are actions that individuals can take. And as I’ve read somewhere, when panic is appropriate, the first person to panic has the most advantage.
