Why not use the wind-generated electricity to power cars directly? Natural gas is still a fossil fuel that emits climate-changing gases when burned. Let’s cut the natural-gas middleman.
Plug-in cars are here, nearly ready to market. We just need to put wind power in the driver’s seat. Several major auto manufacturers, including GM, Ford, Toyota and Nissan, are producing plug-in hybrids. Both Toyota and GM are committed to marketing plug-in hybrids in 2010. Toyota might even try to deliver a plug-in version of its Prius gas-electric hybrid, the bestseller whose U.S. sales match those of all other hybrids combined, next year.
Some Prius owners aren’t even waiting for Toyota. They’ve jumped the gun, converting their cars to plug-ins simply by adding a second storage battery, which increases the distance you can drive between recharges, and an extension cord that you can plug into any wall socket to recharge the batteries from the electrical grid. This lets them push the car’s already exceptional gas mileage in routine daily driving of 46 miles per gallon to more than 100 miles per gallon.
GM is in the game, too, with its Chevrolet Volt. This plug-in car is essentially an electric car with an auxiliary gasoline engine that generates electricity to recharge the batteries when needed. It boasts an all-electric range of 40 miles, more than adequate for most daily driving. GM reports that under typical driving conditions, the Volt averages 151 miles per gallon.
This new car technology is matched by new wind turbine technology, setting the stage for an automotive-fuel economy powered largely by cheap wind energy. The Energy Department notes that North Dakota, Kansas and Texas alone have enough wind energy to easily satisfy national electricity needs. To actually put wind power on the road, of course, we would have to tap the wind resources in nearly all the states, plus those that are off-shore, which the department says can meet 70 percent of national electricity needs.
Texas, this country’s leading oil producer for the last century, is now our leading generator of electricity from wind, having eclipsed California two years ago. With more than 5,500 megawatts of wind-generating capacity now in operation and two vast wind-farm complexes under development, the state will have more than 20,000 megawatts of wind-generating capacity (think 20 coal-fired power plants). Pickens, with his own 4,000-megawatt wind farm under development in the Texas Panhandle, is one of the largest investors. These wind farms could satisfy the residential electricity needs of nearly half the state’s 24 million people.
The key to this massive development is the state government’s participation. The state facilitated the construction of transmission lines that link the strong wind resources in West Texas and the Panhandle to major markets—known as "load centers"—in Dallas, Fort Worth and Houston.
While many residents in some places, such as Cape Cod, take a NIMBY (Not In My Backyard) view of wind farms, the opposite is true in much of the rest of the country—including the ranch country that extends from Texas north through the Dakotas. There, it’s a PIMBY (Put It in My Backyard) issue. In ranching regions, competition among communities for these wind farms, and the jobs and tax revenues that come with them, is intense. Each wind turbine on a rancher’s land typically brings a royalty of $3,000 to $10,000 per year, with no investment on the landowner’s part. And the ranchers can continue to graze cattle on the land.
States outside of ranch country are also chiming in on the wind trend. California’s largest project is a 4,500-megawatt cluster of wind farms in the Tehachapi Mountains in the south that will soon supply a large part of Los Angeles’s electricity. Some 30 other states—led by Iowa, Minnesota, Washington and Colorado—now have commercial-scale wind farms.
New wind proposals are popping up everywhere. In July, California-based Clipper Windpower and BP announced a joint venture to build a 5,050-megawatt wind farm in eastern South Dakota. Since this would produce far more electricity than the state needs, the companies plan to build a transmission line across Iowa, feeding the electricity into Illinois and the Midwestern industrial heartland.
In the East, Delaware is planning an offshore wind farm of up to 600 megawatts—enough to meet the residential needs of 40 percent of its residents. To the north, in Maine, a proposal by the governor to develop 3,000 megawatts of wind-generating capacity (more than enough to meet the state’s residential electricity needs) passed both houses of the legislature unanimously in April. In the Northwest, Oregon and Washington are turning to wind to complement their hydropower resources.
While most of these developments are in the planning stages, the potential—and the desire for wind energy—is high. That’s because wind wins on almost every count. It is carbon-free, cheap, abundant and inexhaustible—and it is ours. No one can embargo the supply, the price never changes, and wind farms can be built in 12 months.
This is why shifting to natural gas to fuel cars, as Pickens recommends, isn’t the best move. In contrast to wind-generated electricity, where costs are falling, the price of natural gas is on its way up. Reserves of natural gas, like those of oil, are shrinking. And ironically, as with oil, we import natural gas, sending money abroad for one-sixth of our supply.
Beyond that, there’s the infrastructure question. How do we get the natural gas to the nation’s service stations? These stations also would need to install pumps for natural gas, in addition to those for gasoline.
One of the attractions of pairing wind energy and plug-in hybrid cars is that it would not require new infrastructure. Indeed, a study by Pacific Northwest National Laboratory points out that the existing grid, using its off-peak capacity to recharge cars, could provide electricity for more than 70 percent of the U.S. fleet if all cars were plug-in hybrids.
With peak oil on our doorstep, the prices of oil and gasoline are projected to continue rising. While gasoline prices are probably headed to $5 to $10 a gallon, the wind-generated-electricity equivalent of a gallon of gasoline costs less than $1.
We are now in a position to launch a crash program to convert to plug-in hybrids on a massive scale and at wartime speed. This would resuscitate Detroit, reinvigorate thousands of the country’s wind-rich rural communities, dramatically cut carbon emissions and quickly reduce the vast outflow of dollars for imported oil.
The car companies themselves seem on board—witness GM’s massive advertising push for the Chevy Volt, with spots airing frequently during NBC’s Olympics broadcasts. After showing a progression of cars, the ad ends with the Volt, standing at the base of snow-capped mountains, clouds traveling swiftly overhead. Its launch is targeted for 2010. Perhaps by then, the wind moving the clouds will also power the sleek-looking sedan below.
Why Ethanol Production Will Drive World Food Prices Even Higher
We are witnessing the beginning of one of the great tragedies of history. The United States, in a misguided effort to reduce its oil insecurity by converting grain into fuel for cars, is generating global food insecurity on a scale never seen before.
The world is facing the most severe food price inflation in history as grain and soybean prices climb to all-time highs. Wheat trading on the Chicago Board of Trade on December 17th breached the $10 per bushel level for the first time ever. In mid-January, corn was trading over $5 per bushel, close to its historic high. And on January 11th, soybeans traded at $13.42 per bushel, the highest price ever recorded. All these prices are double those of a year or two ago.
As a result, prices of food products made directly from these commodities such as bread, pasta, and tortillas, and those made indirectly, such as pork, poultry, beef, milk, and eggs, are everywhere on the rise. In Mexico, corn meal prices are up 60 percent. In Pakistan, flour prices have doubled. China is facing rampant food price inflation, some of the worst in decades.
In industrial countries, the higher processing and marketing share of food costs has softened the blow, but even so, prices of food staples are climbing. By late 2007, the U.S. price of a loaf of whole wheat bread was 12 percent higher than a year earlier, milk was up 29 percent, and eggs were up 36 percent. In Italy, pasta prices were up 20 percent.
World grain prices have increased dramatically on three occasions since World War II, each time as a result of weather-reduced harvests. But now it is a matter of demand simply outpacing supply. In seven of the last eight years world grain production has fallen short of consumption. These annual shortfalls have been covered by drawing down grain stocks, but the carryover stocks—the amount in the bin when the new harvest begins—have now dropped to 54 days of world consumption, the lowest on record. (See data.)
From 1990 to 2005, world grain consumption, driven largely by population growth and rising consumption of grain-based animal products, climbed by an average of 21 million tons per year. Then came the explosion in demand for grain used in U.S. ethanol distilleries, which jumped from 54 million tons in 2006 to 81 million tons in 2007. This 27 million ton jump more than doubled the annual growth in world demand for grain. If 80 percent of the 62 distilleries now under construction are completed by late 2008, grain used to produce fuel for cars will climb to 114 million tons, or 28 percent of the projected 2008 U.S. grain harvest.
Historically the food and energy economies have been largely separate, but now with the construction of so many fuel ethanol distilleries, they are merging. If the food value of grain is less than its fuel value, the market will move the grain into the energy economy. Thus as the price of oil rises, the price of grain follows it upward.
A University of Illinois economics team calculates that with oil at $50 a barrel, it is profitable—with the ethanol subsidy of 51¢ a gallon (equal to $1.43 per bushel of corn)—to convert corn into ethanol as long as the price is below $4 a bushel. But with oil at $100 a barrel, distillers can pay more than $7 a bushel for corn and still break even. If oil climbs to $140, distillers can pay $10 a bushel for corn—double the early 2008 price of $5 per bushel.
The World Bank reports that for each 1 percent rise in food prices, caloric intake among the poor drops 0.5 percent. Millions of those living on the lower rungs of the global economic ladder, people who are barely hanging on, will lose their grip and begin to fall off.
Projections by Professors C. Ford Runge and Benjamin Senauer of the University of Minnesota four years ago showed the number of hungry and malnourished people decreasing from over 800 million to 625 million by 2025. But in early 2007 their update of these projections, taking into account the biofuel effect on world food prices, showed the number of hungry people climbing to 1.2 billion by 2025. That climb is already under way.
Since the budgets of international food aid agencies are set well in advance, a rise in food prices shrinks food assistance. The U.N. World Food Programme (WFP), which is now supplying emergency food aid to 37 countries, is cutting shipments as prices soar. The WFP reports that 18,000 children are dying each day from hunger and related illnesses.
As grain prices climb, a politics of food scarcity is emerging as exporting countries restrict exports to limit the rise in domestic food prices. At the end of January, Russia—one of the top five wheat exporters—will impose a 40-percent export tax on wheat, effectively banning exports. Argentina, another leading wheat exporter, closed export registrations for wheat indefinitely in early December until it could assess the condition of the new crop. And Viet Nam, the number two rice exporter after Thailand, has banned rice exports for several months and will likely not lift this ban until the new crop comes to market.
Rising food prices are translating into social unrest. It began in early 2007 with tortilla demonstrations in Mexico. Then came pasta protests in Italy. More recently, rising bread prices in Pakistan have become a source of unrest. In Jakarta, 10,000 Indonesians gathered in front of the presidential palace on January 14th this year to protest the doubling of soybean prices that has raised the price of tempeh, the national soy-based protein staple. When a supermarket in Chongqing, China, where cooking oil prices have soared, offered this oil at a reduced price, the resulting stampede when doors opened killed three people and injured 31.
As economic stresses translate into political stresses, the number of failing states, such as Afghanistan, Somalia, Sudan, the Democratic Republic of the Congo, and Haiti, which was already increasing before the rise in food prices began, could increase even faster.
There is much to be concerned about on the food front. We enter this new crop year with the lowest grain stocks on record, the highest grain prices ever, the prospect of a smaller U.S. grain harvest as several million acres of land that shifted from soybeans to corn last year go back to soybeans, the need to feed an additional 70 million people, and U.S. distillers wanting 33 million more tons of grain to supply the new ethanol distilleries coming online this year. Corn futures prices for December 2008 delivery are higher than those for March, suggesting that market analysts see even tighter supplies after the next harvest.
Whereas previous dramatic rises in world grain prices were weather-induced, this one is policy-induced and can be dealt with by policy adjustments. The crop fuels program that currently satisfies scarcely 3 percent of U.S. gasoline needs is simply not worth the human suffering and political chaos it is causing. If the entire U.S. grain harvest were converted into ethanol, it would satisfy scarcely 18 percent of our automotive fuel needs.
The irony is that U.S. taxpayers, by subsidizing the conversion of grain into ethanol, are in effect financing a rise in their own food prices. It is time to end the subsidy for converting food into fuel and to do it quickly before the deteriorating world food situation spirals out of control.