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The Emperor's New Hydrogen Economy

A book by Darryl McMahon

Last updated 2009.05.30


The Personal Energy Plan

The 70% OFF sale is over - Oil is selling in the $60-$70/barrel range

However, it's still cheaper than it will be when the world works its way through the current recession. Speculators are in the market already betting on that very thing. If they're right, they are going to make a lot of money - your money! If you want to reward the speculators, don't buy my book, and be ready to pay whatever price they want in months to come. The summer of 2008, with oil at US$147, will look like a picnic in the park compared to the summer of 2010 if we don't change our energy consumption habits.


In December 2008, I wrote the following:

Oilís on Sale! Up to 70% off!!

How can you benefit?

In my opinion, the current price of oil (under US$40 per barrel for most of December 2008) is not rational or sustainable. At $38, it is 74% less expensive than at its peak less than six months ago. Historical precedent for oil pricing elasticity doesnít support either the highs of a few months ago, nor the lows we are experiencing now.

I expect the price of oil will move into the $60-70 range in 2009 and considerably higher before the end of 2010. There are a number of reasons for this. We are not shifting to alternatives at a dramatic rate, and the shift will stagnate in the face of current oil prices. Most alternative energy sources and uses are capital-intensive projects, and credit is currently tight around the world, making it hard to raise the capital to launch the necessary projects. Many governments are proposing infrastructure-based stimulus packages to move their economies out of recession; that will require the use of heavy construction equipment that runs on oil. Many of the projects will be aimed at fixing or extending roadways, which will lead to increased vehicle usage, and demand for oil. Many of the less conventional oil projects starting up now and over the past few years require oil to sell for more than $40/barrel in order to be profitable. Peak Oil is a reality. The current Canadian government is not going to invest in rail or urban transit initiatives or alternate fuel vehicles in any meaningful way because their power base is centred in oil country. The Obama administration may put on a better show of reducing their dependence on foreign oil as a national security strategy, but they cannot afford to offend the oil and automotive industry sectors either.

In short, oil is currently priced as the bargain of a lifetime. How can you take advantage of the situation?

1) Donít forget the summer of 2008 and $147/barrel oil. You will see it again within the next few years. During the next while, think of cheap oil as an unexpected dividend, and invest that dividend in energy efficiency measures so you will be using less energy when the price goes up again.

2) Prepare your Personal Energy Plan now so you can make good choices in terms of investing your cheap oil dividend. (Yes, thatís a plug for my book, The Emperorís New Hydrogen Economy, but this is the very reason I wrote that book.)

3) Downsize your vehicle to something more fuel-efficient that still meets most of your needs, but not necessarily all of them. Remember, you can rent (or borrow) a vehicle to meet your unusual needs.

4) Do your vehicle shopping now, and try to conclude the deal in February 2009. Most automakers are sitting on a surplus of vehicles in all categories, and February is historically the lowest sales month of the year, so dealers should be Ďmotivated sellersí at this time. If not, head down the street, because their competitor should be as well.

5) Donít worry about the Detroit 3 going under. Neither the U.S. nor Canadian governments are going to let that production capacity go idle on an extended basis. The companies may get merged or shuffled, but parts and service will remain available. (Most of the parts arenít made by the Detroit 3 anyway.) (Whether you are satisfied with the quality of their products or not or believe they represent good value for your money is a different matter.)

6) Cheap oil means it is a good time to transport heavy or bulky items now, rather than a couple of years from now. So, if you are considering a wood stove, or solar heating panels or photovoltaics or a wind generator, this is likely a good time to make the purchase and get it shipped.

7) If you are one of the fortunate folks that still have money to invest, the courage to take it out of your mattress despite the current mess the markets are in, and at least a 3-year investment horizon, consider investing in oil producers.

8) Broaden your view to other energy and resource issues, notably supply security for electricity and supplies of potable water. In my opinion, within the next decade we are going to be spending a lot of energy on the production and transportation of drinkable water.

Thatís enough about expensive oil and its consequences, which would be bad enough.

What if the power (electricity) went out? Permanently.

If we are ignorant of our dependence on oil to keep our society running smoothly, we donít even grasp the concept of how much we rely on electricity for our daily routines.

If you thought the August 2003 blackout in the U.S. northeast and Ontario was problematic, consider if it happened in the wee hours of the morning in early February, while this area is experiencing a typical winter cold snap and moderate winter storm.

You would wake up due to the cold of the house, because the natural gas furnace doesnít fire unless the (electric) controller tells it to, and the (electric) ignition circuit fires. The alarm clock did not go off, because it relies on electricity. You canít use the TV or radio. (The battery powered radio has not been used since the previous summer and has dead batteries.) You may or may not have a small supply of hot water, depending on how you produce hot water in your household, and your heating fuel. If you do, it likely wonít last long. Cold water will remain available until the municipal reservoir or water tower is drained. Water pumping is powered by electricity, and the backup systems are not sized for long-term operation. Most of the kitchen appliances wonít function: coffee maker; electric kettle, toaster, microwave, electric stove and range-top, toaster oven, etc. Even some natural gas appliances wonít function unless their electronics are powered. The refrigerator wonít function. Food can be stored outside in this weather, provided you have a metal cooler or similar pest-proof box. Gas stations wonít be able to pump fuel without electricity, so personal transportation grinds to a halt in a matter of days.

The trip to the store to try to pick up emergency supplies is fruitless, because you donít keep cash reserves, and all electronic commerce is shut down because there is no power for cash registers or debit/credit card machines. Some stores donít even try to open because their security systems are not operational, and their insurance policies require them to have electronic surveillance equipment operational.

It gets worse from there. So, while you are contemplating your current financial issues, spare at least a moment to think about how you will respond to an extended power outage, or cut in the municipal water supply. Make it a New Year's resolution to review your 72-hour emergency plan and reserves (or if you don't have one already, to make one, and review it annually).


Below is what I wrote on 2008.07.24, before oil peaked. If you had read this and paid attention, could you have benefitted from it?

The price of oil is rising dramatically. While it may be a short term spike (summer of 2008), it is reasonable to expect that there is an underlying upward trend line due to rising demand for oil world-wide. Because oil is the de facto international energy currency, it's price will impact the price of all other energy sources, primarily to the extent to which they can be substituted.

The use of fossil fuels (oil and its refined products, coal for heating, steel-making and generating electricity, and natural gas) are the predominant cause of man-made greenhouse gases and prodigious amounts of waste heat that are contributing to global climate change (global warming).

Do you have a plan for how you will personally cope (and thrive) in the face of increasingly expensive energy? If not, please read on. (Most of this material is condensed from The Emperor's New Hydrogen Economy. This subject is the essential focus of the latter half of the book.)

The first step in the Personal Energy Plan is to acknowledge there is an issue and resolve to do something about it. This seems to have become much easier as gasoline prices have soared in the summer of 2008, and other fuel prices are also seen to be rising. (While I expect energy prices to fall again in the short term, you should be looking on this as the opportunity to start your shift to more reliable, sustainable and in the long-run, affordable, energy consumption practices.)

The second step is to identify the types and amounts of energy you are using. Fortunately, your utility is likely providing this information to you in the form of a regular bill that shows your energy consumption. In some other cases, you need to keep your own records (e.g., transportation liquid fuel usage, propane tanks used, prices). This information will help you determine where to focus your efforts.

The third step is to reduce your current energy consumption. No matter what energy sources you use, using less will save you money. Further, reducing your energy needs will mean you can use smaller energy devices (furnaces, air conditioners, etc.), which are less expensive or will likely allow your existing devices to work less and last longer. Your energy bills and other records will help you to understand what is working and what is not. There are also electrical energy devices that will measure the power used by a specific device at the plug, or by circuit. You can also learn to read your electrical, gas and water meters and keep records on a regular basis to show consumption by period.

Reducing the amount of conventional energy you use will in turn reduce the amount of greenhouse gas (notably CO2) and waste heat produced.

The fourth step is to move away from increasingly expensive forms of non-renewable fossil energy and move to more sustainable forms of energy, either directly or indirectly. This will further assist in the effort to combat climate change.

Most North American consumers consume their energy in three primary spheres:

  • household;
  • transportation; and,
  • imbedded (or indirect).


    Household

    Space heating

    The primary fossil fuels used for heating our homes are natural gas and heating oil. Some people also use electricity and wood heating. In response to rising heating oil and natural gas prices, many people are looking to other options. One relatively new form of interest is heat pumps, especially ground source heat pumps (GSHP). The best option, but all too frequently overlooked by homeowners, is to improve the insulation and weather sealing of their structures. Insulation isn't flashy, but it works.

    We provide more tips on reducing your heating bill.

    Air Conditioning (cooling)

    As the planet warms, especially in the temperate zones of the industrialized world, the demand for cooling of our living spaces is increasing. The conventional approach to resolving this is the installation and operation of air conditioners. This has the unfortunate consequence of increasing our electrical consumption at peak demand times, which is typically supplied by burning fossil fuels (coal, oil and natural gas), which produces not only more greenhouse gases, but also prodigious amounts of waste heat right at the planet's surface Ė the very thing we are trying to combat with air conditioning. Economists call that a scenario of diminishing returns. To be less diplomatic, it's a fool's game.

    There are some who believe that if we power the air conditioners with 'green' electricity, that resolves the issue. Possibly, if ALL the electricity being used came from sustainable sources, but there is no reason to believe that will be the case in our lifetimes. In fact, for most homes, you will get more air cooling benefit from shading your sun-facing windows with solar panels than you will from the electricity generated. In simple terms, awnings make more sense than PV in terms of benefits for money spent when it comes to cooling a living space.

    Another simple approach that is widely ignored is the 'white roof'. Just use reflective (high albedo) surfaces for our roofing, rather than materials that are highly absorbent to infrared energy. Instead of black asphalt shingles, use metal roofing that is white, a light colour or even the natural shiny surface of the metal. This will reduce the amount of heat produced in the attic, which then radiates into the building below (or prevents the convection of heat out of the house), meaning less energy is required to cool the living space below. This will decrease the amount of solar energy absorbed by the planet, and make a small contribution to reducing global warming.

    We provide more tips on reducing your air conditioning bill.

    Water heating

    Most homes in North America take high quality fuels (electricity, natural gas, oil) and transform them to the lowest form of energy (heat), in order to heat and maintain a store of heated water in a vessel so thermally leaky that it can substantially heat the space around it. Furthermore, we produce waste heat and greenhouse gases into the atmosphere into the bargain. Simple solar water heaters are used in much of the world to heat domestic water because they are cost effective. I have been using one (seasonally) for several years now, and they just work. No moving parts, no energy bills, just some extra plumbing. Mine does have to be uncoupled and drained during the freezing season, but even so has reduced our conventional energy use for water heating by about 60% annually.

    There are also simple steps you can take to reduce the amount of hot water you use, and reduce heating losses from your conventional storage tank. These, and more tips, are available in The Emperor's New Hydrogen Economy.

    We provide more tips on reducing your water heating bill toward the end of this page.

    Appliances

    The refrigerator is one of the great efficiency success stories of the past fifteen years. A refrigerator built in 2008 may use up to 70% less energy than one of equivalent capacity built in 1983. Gains for freezers are not quite as impressive, but still substantial. If you want to reduce your electrical consumption, the household refrigerator and freezer (if more than 10 years old) are likely targets. Check the consumption statistics on your old fridge and compare to modern units to see if you should be changing over. Some jurisdictions and electrical utilities offer incentives to trade in your old refrigerator on a new, more efficient unit.

    Look for the prices of efficient, horizontal access washing machines and air conditioners to fall in the next couple of years (it has already begun).

    Lighting

    While LED lighting is the current darling of the energy-saver set, conventional fluorescent tube lighting and compact fluorescent lights (CFL) are still the most efficient form of lighting for residential use. CFLs are available in a number of form factors which make them screw-in direct replacements for most Edison base incandescent light bulbs. In general, CFLs will pay for themselves and return savings on your electrical bill during their life. Personally, I recommend staying away from the dollar-store CFLs and spend the extra on name brands (such as Phillips and Sylvania OSRAM) to get the longer life expected and warmer colour light desired.

    Water (delivery/transport)

    Many people don't think of their water use as an energy issue. However, water is heavy, and it takes energy to move it from from its source (well, surface body of water, municipal supply station) to the taps in your house or penthouse apartment. The average North American uses 221,000 litres of drinking water per year. (http://www.unescap.org/stat/data/syb2007/26-Water-use-syb2007.asp Drinking water plus water withdrawn for homes, municipalities, commercial establishments, and public services, divided by population. - UN Definition) Moving that water up 50 metres (typical to provide 40 psi at the taps on the ground) takes a lot of energy Ė about 30 kWh per person per year in North America.

    Reducing your water use will reduce your energy consumption, either directly if you pump your own water from a well, or indirectly (water or municipal tax bill) if you get water from a municipal supply, or as imbedded in other services and goods which you buy.

    For most homes, the number one water consumer is the toilet. An older conventional toilet can use 20 litres (5 gallons) or more per flush/fill cycle. The low-flow (LF) toilets use 13 litres (3 gallons) or more. Ultra Low Flow (ULF) toilets use 6 litres (1.5 gallons) or more. Composting toilets reduce or eliminate the water consumption, but most require heat energy to operate and are not permitted in many jurisdictions (check with local authorities to see if you can use one). The best device we have found to help reduce that water wastage in flush toilets is the Water Saver toilet fill diverter.

    Our water use for drinking, bathing and cooking tends to be small. There may be a small gain in switching from a dishwasher to handwashing of dishes, but only if you are frugal in your water use when washing by hand (e.g., no running water for rinsing).

    There is a bigger gain from mastering the ďcoldĒ water hand-wash. When washing your hands (as opposed to degreasing them from something seriously mucky), use the first few seconds of water from the cold water tap rather than waiting for hot water to arrive via the pipes from the distant hot water tank. The water in the pipe close to the tap will be at room temperature or close to it. Used with soap, it will be perfectly adequate for sanitizing against germs. (Germs and bacteria that have evolved with humans over the millennia are perfectly comfortable at temperatures that we can stand to use for washing our hands.) Waiting for the hot water to arrive via the pipes and then mixing it with cold water will typically waste several litres of water and up to a minute of time.


    Transportation

    (Coming first quarter 2009 Ė if you want to know when this update is posted, join the Econogics mailing list. If you can't wait, you can buy the book or e-book now.)

    Personal motor vehicles / Urban sprawl / Bicycles / Walking / Public transit / Common carriers (trains, plains, inter-city buses, ships, ferries)


    Imbedded

    (Coming second quarter 2009 Ė if you want to know when this update is posted, join the Econogics mailing list. If you can't wait, you can buy the book or e-book now.)

    Plastics / Packaging / Food miles (locavores, seasonal foods) / Trash miles / Trucking / shipping / rail shipment of goods


    Shifting to Sustainable Energy Sources and Consumption

    (Coming third quarter 2009 - if you want to know when this update is posted, join the Econogics mailing list. If you can't wait, you can buy the book or e-book now.)


    For your Personal Energy Plan, remember the 4 Steps.

    1) Recognize the problem and resolve to do something about it.
    2) Identify the energy you are using.
    3) Take measures to reduce your energy consumption.
    4) Shift to sustainable energy sources.

    Making The Personal Energy Plan into Your Personal Energy Plan is up to you.

    Your Personal Energy Plan is personal; tailored specifically to you, by you. It is about exactly your situation. My personal energy mix (supply and use) is not the same as yours. So, while I can (and do) offer useful information, it is up to you to apply it. For example, I can tell provide specific tips on reducing your heating bill, but if you live on the equator, that may have no value to you.

    Your Personal Energy Plan is not meant to be a one-shot deal. It is about your energy independence, and can be applied over and over again in the different areas where you use and produce energy. The analysis that flows from Step 2 will help you to prioritize your actions, whether they are based on ease of implementation or environmental concerns or return on investment or whatever motivates you.

    One, two, three, four,
    Let's go save some more!


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