Will The Electric Age Overcome The Oil Crisis?

Yesterday two idea clusters rose above the myriad others that floated in, out, and around my mind.  One started my day, the other came near the end.  They stood in juxtaposition like The Future and The Past.  Together I think they point to an important feature of our Rapid Transition from the Hydrocarbon Age toward the Electron Age.

The first idea cluster came at a breakfast presentation by Marshall Goldman, the urbane, erudite former Wellesley professor and Russian expert who recently wrote Petrostate: Putin, Power, and the New Russia. Goldman’s delightful lecture at New York’s Carnegie Council for Ethics in International Affairs, painted a picture of the enormous rise in wealth and status of Russian business people and the Russian state which shows every indication of expanding continuously over the next decades.  There is no doubt that high oil and gas prices have dealt Russia a hand with four aces. Goldman is a good observer and reporter; his narrative seemed compelling and full of significance.

The Chevy Volt idea cluster came toward the end of my day as I read this report about G.M.’s soon-to-be-marketed plug-in electric hybrid car.  It will be able to go 400 miles at over 100 mpg on a small tank of gas that simply helps to recharge the electric motor. The report says the car will be produced in volume - over 100,000 a year - after 2010, that the first models will be on the street “soon”, and that the car will be made in one of G.M.’s most visible plants located close to G.M. HQ.  In other words, the Volt is to be a signature car for what G.M. hopes its future will look like, and it wants the world to know that.  The Volt is a piece of industrial drama and it’s significance, like that of the rise of Russia, has broad implications for human affairs.

When you think about Russia and their great international infrastructure for natural gas distribution that their giant state gas monopoly Gazprom operates, the images you get are of huge, dirty, expensive pipelines - 6″ or 12″ or 18″ - buried under ground and even under seas collecting gas from distant, cold, inhuman fields and bringing it to all the people of Europe.  And in the process making nearly everyone from London to St. Petersburg dependent on the continued good will of one man, Vladimir Putin, for the reliability of their heating and cooking systems.

When you think about the Volt, you see a sleek, nearly silent machine powered by invisible electrons that are generated relatively close to where they are consumed and distributed through small cables that are easily and rapidly laid - at least in comparison with a gas pipeline.  The electrons may soon be generated directly from the energy of sunlight falling silently to earth at no cost converted to energy by concentrating solar thermal or wind or wave generators with no greenhouse gases.  Or maybe the electrons come from falling water or from geothermal heat, also free inputs.  No one man can hold anyone hostage for this energy source.  The Age of Electrons will be the apotheosis of democracy translated to commerce.

These two important stories - the Volt and the Russians - are, like nearly all energy-related information clusters that come along during an average day, easily classified into one of these two categories - either “How the End of the Hydrocarbon Age is Unfolding” or “How the Age of the Electron Will Look and Will Impact Us.”

Probably 95% of these information clusters are of the former variety and maybe 5% are the latter.  Both are useful.  It’s important for us to understand how the Hydrocarbon Age will end because we will be living through that period for the next ten to twenty years and if we are to get through this period with the least damage and the most wealth left intact, we must do our best to understand it.  So the experience and insights of Dr. Goldman are useful.

But let’s bear in mind, as we decide whether oil will next go down to $100 or up to $150 and more importantly whether we are at all prepared for the turmoil of the times when oil costs $500 in a few years,  that as important as such questions are, they only deal with the dying days of a life style we will soon put behind us.  The rarer information clusters like the Volt, the 5% coming our way that deal with the coming Age of Electrons, are what will matter more to our grandchildren, thank goodness.  So let’s pay attention to them too.  And let’s organize to get there.  It will be a lot cleaner, cheaper…and more democratic.

Posted in Categories: Commodities, Contributor, Eurozone, External Research.

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Comment by MoreRegulation

2008-06-07 11:04:22

Hate the steep oil rally but hopefully HOPEFULLY this would make big corporations invest more in renewable energy sources.

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Comment by jlounsbury59

2008-06-07 16:10:18

Excellent summary. I prefer the term “Age of Combustion” rather than the “Age of Hydrocarbons”. The “Age of Electrons” is coming faster than 99% of the public realizes. Nuclear power will be marginalized based on cost.

In the age of electrons, with cheap electrical power, hydrogen production will be far less expensive than combustible fuels and the fuel cell will become commonplace. The cost of buildout of distribution systems for hydrogen will be offset by savings from reduced use of expensive combustible fuels.

The production of energy for the U.S. will become largely an American industry and our national economy will come back under our control. We will have the capablity of having a more favorable balance of trade and can remove ourselves from the category of debtor nation.

The pain of the transition from the Age of Combustion to the Age of the Electron will be less than the agony of not making the change. There will be a problem convincing the instant gratification American society that this is the case, but it must be done. It will require leadership a la FDR, JFK or Ronald Reagan. I pray we will receive and accept such a leader.

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Comment by pfran21

2008-06-07 16:30:09

Getting US energy production back as a US industry will be a key step to stemming the outflow of US dollars to buy oil from countries that the US wouldn’t otherwise deal with.

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