Ironically, North America’s electrical grid seems to have become a private sector welfare program compared to the financial devastation being wreaked on propane, fuel oil and natural gas customers in the United States. There are alternatives.
During the third week of January 2014, propane customers in much of the Southeastern United States were shocked by a sudden 21% increase in their fuel bills. One minute local distributors were charging about $2.85 a gallon. The next minute the distributors were charging about $3.45.
There is no shortage of either propane or natural gas. The jump was caused by commodities speculators seeking to maximize their profits after the weather forecasters announced that another polar vortex was rolling down from the Arctic during the last week in January. This justification seems irrational to hard-pressed middle class families, but it is the economic reality of policy changes made by the Bush Administration, that have been continued by the Obama Administration.
The repetitive cost increases on propane have devastated the finances of middle class families, already reeling from the tripling of gasoline prices and constant escalation of food prices. In the spring of 2012 filling a 300 gallon residential propane tank would have cost about $651, while this week, it would cost $1035. For a family with four to six members in a 2,000 sq. ft. house in a 6,000+ degree day heating zone with propane heating, hot water and cooking, that amounts to an increase in energy expenses of about $1536 a year.
The use of energy costs as a weapon first against the United States and then, the middle class of the United States, has a history going back 45 years. In that period, energy has frequently been a political basketball.
Things did not always turn out as promised
After years of steady decline, petroleum production inside the United States increased dramatically after President Richard Nixon’s administration approved drilling operations in Alaska’s North Slope oil fields. Nixon promised that the influx of Alaska oil would keep energy costs stable in the United States. That is exactly what happened throughout the remainder of the 20th century.
During the Yom Kippur War in the autumn of 1973, American oil companies openly cooperated with an oil embargo against the United States, when requested to do so by the newly formed Arab oil producing cartel. The United States was not a combatant in this war, but the Muslim countries, attacking Israel, hoped that energy shortages would cause the United States to drop support for Israel. There was gasoline and fuel oil rationing throughout the United States. The prices of gasoline and fuel oil doubled in a matter of weeks, but did come down significantly when petroleum prices returned to normal.
A cornerstone of Jimmy Carter’s Energy Independence Program between 1976 and 1980 was a series of incentives to encourage drilling for oil within the United States and on the continental shelves of the Atlantic and Pacific coasts. Environmentally sensitive locales and active fault zones were off limits. The Carter Administration also pressured oil companies to shift their purchases of crude oil from the Middle East to Canada and Latin America. Carter also instituted a nationwide speed limit of 55 mph, since fuel efficiency in 1970ish cars dropped dramatically at high speeds.
The Energy Independence Program also pumped federal funds and tax incentives into the development of solar power, wind power, water power and more efficient, less polluting wood stoves. Tax credits were given to consumers who invested in alternative energy sources. Many small companies were started to convert old dams into small hydroelectric plants.
As one of his first acts as president, Ronald Reagan scrapped most of Carter’s energy independence program and put the funds into military budgets. Soon after oil companies began drilling off the California coast, the Reagan Administration instituted bans on the drilling of oil and natural gas wells on the Continental Shelves of the Pacific and Atlantic Coasts. Reagan’s executive order that ended off-shore drilling was generally supported by the electorate. There was no immediate effect on gasoline, fuel oil and natural gas prices.
The Clinton Administration continued the drilling policies of the Reagan and George H. Bush Administrations, but did develop incentives for manufacturers to develop more efficient appliances and light sources. This is when LED technology began developing. Ironically, from thence forward, the Democrats were blamed for the ban on drilling off the California coast. Gasoline and fuel oil prices declined somewhat during this period due to the influx of Alaskan, Canadian, Mexican and Caribbean Basin oil
The George H. Bush Administration urged deregulation of petroleum and natural gas exploration and prices with the promise of cheap energy. Federal and state agencies complied by deregulating natural gas prices so that funds would flow to explorers taking risks. Fracking technology for obtaining natural gas and oil in several regions of the United States was encouraged by the Bush Administration.
The Bush Administration promised citizens that an abundance of natural gas would drop energy costs dramatically. The production of propane was shifted from being a byproduct of gasoline refineries to being a refinement of natural gas. Propane prices did drop some in 2010, but remained about twice what they had been during the Clinton Administration.
The reward given to the middle class for its generosity in subsidizing energy exploration is a tripling of middle class energy bills. The Bush Administration’s policies caused gasoline prices to skyrocket to over $4.00 a gallon by the summer of 2008. This had a devastating effect on auto based tourism and soon caused rapid inflation in retail prices. Simultaneously, the federal subsidy of ethanol made from corn caused food prices, particularly meats, to skyrocket. Gasoline prices have generally migrated between $3.20 to $4 a gallon since 2008.
A devastating speculator attack was also made on fuel oil customers in 2008. Some major national banks purchased off shore fuel oil storage facilities and tankers. They created an artificial shortage which caused fuel oil prices to explode on the Atlantic Coast. Fuel oil was primarily used for heating in New England, the Middle Atlantic States and Appalachia. Many New Englanders were suddenly looking at $7-10,000 a year heating bills. The crisis cause many families to lose their homes and go into bankruptcy. Many of those who survived this crisis bought propane gas furnaces.
The United States is now the largest exporter of petroleum and natural gas in the world. Gasoline averaged $1.06 a gallon when Bush entered office. It now averages $3.46 a gallon. Bulk natural gas cost $2.42 per million BTU when Bush was inaugurated. The spot price reached as high as $8.24 during his administration, but is now down to $4.24 per million BTU. In other words, the American consumers were “taxed without representation” trillions of dollars in energy costs to enable these industries to astronomically increase their production and profits.
One of the many lies that your teachers and professors told you was that the hypothetical “free market” economy would make life better for everyone. The reality is that just like Marxism, an unregulated free market economy can only exist in a police state. There will always be individuals, groups and corporations, totally focused on the accumulation of power and wealth, who will exploit others.
An immediate solution
Even the most modest of household incomes can usually afford a wood stove, at least a used one. (See the links to articles below.) This will immediately reduce the amount of propane, fuel oil, natural gas or electricity that the household must purchase to heat their home. A wood stove drastically reduces heating costs. The stove can also be used for cooking and heating water. An extra benefit is that the stove continues to heat and cook when the electricity goes off. It can be the difference between survival and catastrophe.
There are several drawbacks to a wood stove. Someone must always be in or near the house to feed the wood into the stove or the flames will die out. The ashes can be messy. Also, wood heating is not an ideal environmental situation. If all homes relied entirely on wood heating, the atmospheres of urban areas would be choked with smoke. However, if it’s a choice between going bankrupt, freezing to death or using a wood stove, the rational decision is to install a wood stove.
Long term solutions
The only effective ways for North American citizens to escape the clutches of speculators, price gougers and delusional “free market is our god” politicians will be radical changes in their living environments and the way that they obtain energy. There will be no simple switches to flip.
One of the most inexplicable wastes of energy in the United States and Canada is occurring in many rural areas. Sewage treatment plants, plus decomposing animal feces from beef feed lots, poultry houses, dairies and hog operations produce vast quantities of methane gas, which is the primary component of natural gas. In most North American facilities, the gas typically escapes into the air and pollutes what we breathe.
The technology for capturing, storing and re-distributing this methane gas has been around for five decades. Since the 1960s Scandinavian sewage treatment systems have been siphoning off the methane and selling the composted sewage to farmers as fertilizer. It is standard operating procedure in China for animal waste methane to be used as a fuel. Meanwhile, poultry farmers in North America struggle with venting out the methane gases in their barns, while buying propane to heat them in the winter.
Earth berms, building insulation, insulated windows and weather sealing can drastically reduce the energy consumption of a house or apartment. Canadian building codes are far more stringent in this area of concern than typical counterparts in the United States. However, such improvements do not, in themselves, divorce the house from dependence on centralized sources of energy. They merely reduce the relative expenditures for that energy.
True independence from the price gougers will only occur after the fundamental architecture of the North American house is changed. Just as the International Space Station operates independently of energy sources, water sources and sewage treatment on earth, the same technology is available on earth, but at a much lower cost. In temperate, sub-tropical and tropical regions it is technologically feasible to build an off the grid house. The extreme climatic conditions of desert climates will probably require imported water, while arctic and sub-arctic regions will probably require external energy sources for heat.
There is a glut of natural gas in North America today. The most efficient place for it to be used is metropolitan and urban area electric generation plants. When purchasing gas for power generation in volume, the executives of electrical companies are able to mitigate the economic instability and inefficiency caused by speculators and the attempts of regional suppliers to gouge prices.
Total electric operation, supplemented by passive solar heat and/or efficient wood stoves will be required to provide independence from fossil fuel speculators. In an urban setting, the house would be connected to the electric power grid, but also be capable of contributing electricity to the grid. Power companies might even be interested in installing the solar collectors themselves as a means of reducing peak power generation demands on hot summer days.
In rural areas of temperate and tropical climatic zones, truly off-the grid houses are a realistic prospect. A rural setting permits the space needed for generating all electric energy for the house throughout the year, plus the energy storage system needed for dark and cold days. In the summer, the solar panels could generate substantial income from the household. It is quite possible that family farms of the future will also be power generation farms.
The famous film critic, Pauline Kael, once coined this phrase that will probably stay in English prose forever: “Where there is a will, there is a way. If there is a chance in a million that you can do something, anything . . . do it. Pry the door, open or, if need be, wedge your foot in that door and keep it open.”