Aiding and abetting the solar and wind energy industries in their continuing efforts to mislead the American people, Energy Secretary Steven Chu called for a shift to renewable energy to insulate us from petroleum price spikes. Recent events in Egypt are partially responsible for a recent jump in oil prices, but renewables are not the answer. A few facts will show why.
First, according the Obama Administration’s own Energy Information Administration, petroleum accounts for less than 1 percent of electricity production. Since wind and solar produce electricity and not transportation fuel, these renewables cannot replace anything more than a negligible fraction of domestic petroleum production. Wind and solar can replace only fuels like coal and gas, which we have in abundance in the U.S.
Second, the major biomass source of transportation fuels, corn-based ethanol, is fraught with problems—even uber-green Al Gore has called our ethanol mandates a mistake. Over 40 percent of our domestic corn consumption goes to ethanol, which provides less than 10 percent of our transportation fuel and is a factor in food-price increases. Cellulosic ethanol production (made primarily from non-food sources) is not even close to being on track to providing industrial-scale quantities of fuel. And the experience with corn ethanol raises the question of what problems we will discover with cellulosic ethanol if it ever does get up to scale.
Third, though the recent unrest makes markets nervous about the Suez Canal (through which 2–3 percent of the world’s petroleum travels), Egypt is not a major producer of petroleum.
Fourth, petroleum prices have been rising for months as the world economy pulls out of the recession. The price spikes of the past week are not abnormal.
Note: Thunderhorse, a single oil production platform (with multiple wells) in the Gulf of Mexico, produces nearly 4 billion gallons of petroleum per year. Three platforms like Thunderhorse would provide an amount of petroleum equivalent to all the biofuels currently produced in the U.S.