Posts Tagged ‘Middle East’

The Energy Challenge

July 3, 2015


On almost a daily basis, we hear that energy
prices are going up. Media sources, the government, energy producers,
consumer and environmental groups provide a constant stream of reports,
articles, interviews, and opinions on the subject. A lot of information
from different sources, sometimes with their own agenda…who do you
trust? This paper will try to pull together reliable facts, citing the
sources and providing links to the source documents, that will answer
the following questions:

— What is the problem?

— How does it affect each of us?

— How can I avoid it, or is there a way I can benefit?

— What are my options?

— How do I do this?

— What will it cost me?

— How do I pay for it?

— When do I need to take action?


resources are used for generating electricity, for transportation, for
manufacturing, and for heating. Renewable energy sources (biomass,
hydropower, geothermal, wind, and solar) provide for only 6.1% of US
energy consumption. Nonrenewable resources (fossil fuels and nuclear
power) provide for the remaining energy consumption, and within this
group, fossil fuels provide for 85%.1

Projections from the DOE’s
(Department of Energy) International Energy Outlook 2006 indicate
continued and strong growth for worldwide energy demand for the
foreseeable future. Fossil fuels will continue to provide for most of
this demand.

What is the problem?

There are a couple. First,
there’s a limited supply. At 2003 consumption levels, there are 44.6
years of oil and 66.2 years of natural gas supply remaining.2 The growth
in oil consumption, in part due to new economies in China and southeast
Asia, has taken up much of OPEC’s spare production capacity.3 Over 68%
of the world’s oil producing countries show declines.4

The second
problem is the location. A breakdown of proven world oil reserves shows
the Middle East with 65%, South and Central America with 10%, Africa
with 7%, the U.S. and former Soviet Union with 6% each, Asia Pacific
with 4%, and Europe with 2%.5 The World Coal Institute reports that
there is enough coal to last over 155 years. A breakdown shows the U.S.
with 27%, Russia with 17%, China with 13%, and India with 10% of the
world’s recoverable reserves.6 The top producers of natural gas, the
cleanest burning fossil fuel (proven reserves) are Middle East with over
40%, the former Soviet Union with over 30%, 27.5%, the , the U.S. with
3.1%, Africa with around 6%, the U.S. and Canada with 4%.7 As you can
see, most of the world’s proven reserves are located in OPEC countries,
some of which are involved in external and internal struggle, or are
thought to provide funding for terrorist activities. Venezuela, owner of
Citgo Oil Corporation, is transitioning into a socialist form of
government. Its leader, Hugo Chavez, is friendly with Iran and is a
vocal critic of the U.S. The question becomes “Is the money we spend on
energy funding terrorist and other activities, and if so, how much?”

you get beyond the supply and location of the resource, you have to get
it to market. The Middle East conflict, Iran’s increasingly militant
stance, and the ease at which terrorist organizations can move
throughout the Mideast, could potentially choke transportation through
the Red Sea and Strait of Hormuz. Transportation of LNG (liquified
natural gas) provides its own challenges due to numerous environmental
and safety concerns. Coal requires mining, either in surface “strip”
mines or underground through use of tunnels.

Finally, you need to
take a look at how you’re going to use it. Most of the natural gas and
coal is used to generate electricity, while most of the oil is used in
transportation and manufacturing. Demand for electricity is increasing
worldwide with estimates as high as 40% by 2030 in the U.S.

How it affects each of us:

are 3 major effects; higher prices, increased greenhouse gases (and
global warming), and a limited supply that will eventually run out.
There is no way to get around these given our current pattern of use.

Energy Information Administration’s Annual Energy Outlook 2007 with
Projections to 2030 (Early Release) predicts a slow decline from 2006’s
$69 per barrel to around $50 per barrel in 2014, then rise towards $59
per barrel in 2030, based on 2005 dollars. The wellhead price for
natural gas is projected to decline to just below $5 per thousand cubic
feet in 2015 and then increase to around $6 per thousand cubic feet in
2030. A potential problem is that imports of LNG (liquified natural
gas), new production in Alaska, and new production from unconventional
sources may not offset increased demand. Coal prices will rise to around
$36.38 per ton. Electricity will follow the same trend but rise to
around $0.13 per KwH in 2030. When adjusted for inflation the cost of
these resources may be significantly higher.

When sunlight heats
the earth, some of this heat is trapped in the atmosphere, just as heat
is trapped in a greenhouse at your local florist’s. Instead of a roof,
heat is trapped by clouds, water vapor, carbon dioxide, and other
pollutants, commonly called greenhouse gases. Production of these
greenhouse gases are largely due to human activity. As the concentration
of these gases increase, global warming theory says that the earth’s
temperature rises creating health hazards and loss of life, increased
demand for cooling (more energy use, causing still more greenhouse
gases), and the potential of irreversible environmental damage, such as
reduced crop production, increases in acid rain, hurricane and typhoon
strength, and melting of the polar ice caps, resulting in flooding of
low lying areas.

Although these major effects are certainly
important, no less important are other, secondary effects such as
increased global and socioeconomic instability, higher costs, and
increased pollution. The financial consequences cannot be overlooked; a
recent report commissioned by the British Government found that the cost
of combatting global warming would be around 1% of gross domestic
product per year and the cost of failing to act could be as high as 5%
every year from now throughout the future.

How can I avoid it, or is there a way I can benefit?

there is no way to avoid feeling the impact of increased energy prices,
you can take action to reduce the amount of these resources you
consume. By investing in clean energy and use of renewable resources, we
can create new jobs, cut resource consumption, decrease environmental
impact, and save money. Builders, resource suppliers, and service
organizations can achieve improved profits and lower costs while
improving the environment.

What are my options?

There are really only 3 courses of action to follow:

1.Continue on with your current use patterns, pay the going rate for utilities and other resources, and hope for the best.

2.Cut the amount of energy you consume by becoming more energy efficient.

3.Take action to increase use of recyclable, low impact materials, chemicals, and goods to decrease environmental impact.

How do I do this?

best and most established program for energy efficiency is ENERGY STAR,
a program developed by the EPA and DOE. The purpose of this program is
to help all of us save money while protecting the environment through
use of energy efficient products and services. In 2005 alone, Americans
using this program saved enough energy to avoid greenhouse gas
emissions equivalent to 23 million cars- and save $12 billion on utility
bills. The ENERGY STAR website, at,
provides a wealth of information for your use. If you need help beyond
this, or don’t have the resources available to dedicate time to this,
you can get help from a variety of ENERGY STAR Service and Product
Providers. There’s a link at the website that will take you to a list of
these organizations.

As for decreasing your environmental impact,
there are a variety of environmental organizations that provide
information and how-to assistance. The US Green Building Council,
established in 1997, is an association of leaders from the building
industry that work together to “promote buildings that are
environmentally responsible, profitable, and healthy places to live and
work.”10 Their LEED (Leadership in Environmentally Efficient Design)
program is the benchmark for high performance buildings. There are
certification programs for both new and existing buildings. For more
information, please visit their website.

As consumers of products
and services, you can reduce environmental impact by using biodegradable
and recyclable materials and employing service providers and other
companies that use these products. Even such things as janitorial
services can benefit by using these materials and processes. Look for
products that are certified to be recyclable, biodegradable, and have
little or no impact on building indoor air quality.

What will it cost me?

cost of upgrading to an energy efficient and low environmental impact
depends largely on what you decide to do. Many actions you can take have
no cost, or are competitive with your current expenses. The ENERGY STAR
program provides steps that will pay for themselves over time through
energy savings, and the results are impressive:

— Improvements in
energy performance and employee comfort can increase income due to
improved productivity, perhaps as much as 10 times as high as the energy
cost savings produced by performing the upgrade.

— Energy
efficiency improvements provide savings for their entire product life,
perhaps up to 20 years, well past the point where the savings have paid
for the initial improvement.

— Reducing energy use 30% in a
commercial office building is equivalent to increasing net operating
income and building asset value by 5% and lowers operating costs by
$25,000 per year for every 50,000 square feet of typical office space.

Ask yourself, “How much new equipment could you buy from the dollars saved by installing energy efficient equipment now?”

How do I pay for it?

ENERGY STAR program uses future cost savings to pay for energy
efficiency upgrades today, without competing with other capital projects
for funding.

If you do the project, you pay for itself through
energy savings – and – if you don’t do the project, you pay for it just
the same through continued high energy costs.

But how is this
possible? Analysis takes your cost of capital (rate at which you can
borrow money), the square footage of your facilities, energy costs,
your best estimate of % potential savings, term of the loan, and time
value of money to provide an estimate of how much equipment can be
bought without increasing your existing capital or operating budgets.
The upgrade pays for itself and associated loan costs through future
cost savings and provides the simple payback period. For an example of
this, please refer to my article Improving Energy Efficiency Improves
Bottom Line available online at Ezine Articles (
or from my company website at

for decreasing your environmental impact, many new
environmentally-friendly products are already cost competitive, and you
can find detailed information at a variety of websites.

When do I need to take action?

in taking action will only increase your operating costs, so taking
action sooner rather than later is certainly the better choice. There is
another reason to take action now; in August 2005, President Bush
signed the 2005 Energy Policy Act into law. This measure provides for
tax deductions for upgrades to commercial buildings that meet certain
performance criteria. A copy of the IRS notice can be found on the BOMA
International Web site at

Time is running out; these deductions go away on December 31,2007 although Congress may extend them during their next session.

But why wait? For all the right reasons, the time is now to improve your energy efficiency and help improve the environment.