Note: I am not trying to be disrespectful to Mr. Khosla with this title, nor am I implying that he is a bad guy or a monster. The title is meant to capture his penchant for inconsistent arguments on the same issue, almost as if the issue was being argued by two different people.
Mr. Khosla has been much in the news lately. In the upcoming issue of Wired, he again repeats the claim that it is twice as efficient to produce ethanol as it is to produce gasoline:
“A typical corn ethanol plant produces 1.3 to 1.8 BTUs for every BTU of fossil fuel input, including the energy required to grow the corn. (Gasoline has half the efficiency of corn ethanol, producing 0.8 BTUs for every BTU input).”
However, I have pointed out his error on multiple occasions, on the phone and in print. He is comparing an EROEI for ethanol to an efficiency of production for gasoline. To this, he says “energy balance is a silly question to ask”, or it is “the wrong question.” So, it is a legitimate issue if he is claiming that it is more efficient to produce ethanol, but silly when someone points out that this isn’t accurate.
Then, last night a reader sent me a copy of an article in WSJ. I don’t have a link, but here are some excerpts:
Venture Firms Ignite Bitter Fight With Push for California Oil Tax
Oil companies “are ripping us off,” says Mr. Khosla, who earned much of his wealth as a Kleiner Perkins partner and now runs Khosla Ventures. “There are cheaper alternatives to oil that they don’t want us to have.”
Right. Cheaper alternatives that they don’t want us to have. That must explain why Shell is funding cellulosic ethanol producer Iogen, and almost all oil companies have alternative fuel ventures. Furthermore, as I have pointed out before, if ethanol is cheaper to make as Khosla has claimed, and yet the price is consistently higher than for gasoline, just who is ripping off whom here? Since ethanol producers are earning much fatter margins, it seems that they are doing more ripping off in this case. I also wonder if it is possible to become a billionaire, as Mr. Khosla is, without “ripping some people off”, based on the definition he is using. Those billions came out of a lot of pockets.
Opponents argue that the measure would choke off oil companies’ interest in developing new California fields, which could reduce property-tax revenue and lead to greater U.S. dependence on foreign oil. Mr. Khosla calls such arguments “scare-mongering.” He says the tax, which will last a maximum of 10 years, likely wouldn’t be in effect long enough to affect long-term production plans.
There is one thing you can say about Mr. Khosla. He doesn’t let facts get in the way of his claims. I recently asked Ana Unruh Cohen, who helped write the legislation, the following two questions:
What happens if the proposition doesn’t raise as much money as anticipated? Who pays the difference, and how?
She responded:
The royalty stays in place until the 4 billion is raised. The authority can borrow against that 4 billion to start funding programs immediately.
So, “a maximum of 10 years”, eh? It would appear not. Of course this wouldn’t be the first time Mr. Khosla has been guilty of exaggerating claims in order to argue his point.
I want to make it clear that I harbor no personal animosity toward Mr. Khosla. I even support a number of his ideas. I just want to push him toward a more fact-based debate. I am very concerned about our energy policy, and making false or exaggerated claims in order to push a certain agenda is not my idea of how we should get to the root of which policies we should pursue.
Robert: Don’t feel you need to be so solicitous of Mr. Khosla. He’s a big boy and can take the criticism. Or if not, he’s got enough money so he shouldn’t care.
If you think he’s full of it, just say so.
Or if you think he’s on the side of the angels but not helping the debate, that’s OK, too.
Well said sir. As an engineer, I have to say, your energy blog is way better than most of the trashy wannabe-techno editorials out there. It feels good knowing someone is criticizing both sides of the debate and representing the unaffiliated majority in this tussle.
Would you consider it an insult if I called you the Jon Stewart of energy issues?
Would you consider it an insult if I called you the Jon Stewart of energy issues?
No way. I love Jon Stewart. I watch him and Colbert every night. That’s about all of the TV I watch, but I never miss those guys.
Cheers,
RR
“Right. Cheaper alternatives that they don’t want us to have. That must explain why Shell is funding cellulosic ethanol producer Iogen, and almost all oil companies have alternative fuel ventures.”
They are accused of using cheap ploys to offset the real cost of petroleum. They may be funding ethanol projects or even buying out the ethanol market, but what’s your evidence that they are trying to replace their own petroleum with viable alternatives? Nothing. Seems like your bar is so low it does not even exist.
“I also wonder if it is possible to become a billionaire, as Mr. Khosla is, without “ripping some people off”, based on the definition he is using. Those billions came out of a lot of pockets.”
You miss the point. The question you should be asking is whether Mr. Khosla made money in an industry that knowingly operated with harmful externalities in order to maximize profit. In other words, did he peddle a destructive and harmful substance, from a highly-centralized infrastructure with only a few competitors, because it was able to guarantee long-term margins?
You may be knowledgeable of chemical engineering, but your grasp of politics, philosophy and economics are suspect.
The question you should be asking is whether Mr. Khosla made money in an industry that knowingly operated with harmful externalities in order to maximize profit.
Of COURSE he did. Are there any modern industries that don’t profit from externalized costs?
Granted, there are gradations of badness here: On one end, you’ve got the committed organic farmer, whose externalities are largely the unavoidable ones that come with being enmeshed in our industrial infrastructure. On the other end, you’ve got the extractive industries: mining, timber, greenfield real estate development (yes, that’s right), and oil. But given the heavy footprint associated with computers and similar equipment, I suspect Mr. Khosla is much closer to the high end than to the low.
They are accused of using cheap ploys to offset the real cost of petroleum.
Right. Damned if they do, damned if they don’t.
They may be funding ethanol projects or even buying out the ethanol market, but what’s your evidence that they are trying to replace their own petroleum with viable alternatives?
Of course they aren’t trying to replace petroleum with viable alternatives. There are no viable alternatives, unless we are willing to greatly cut down on our energy consumption. Longer-term, there are some intriguing possibilities (I think solar, used to charge electric cars, will ultimately win the day).
The question you should be asking is whether Mr. Khosla made money in an industry that knowingly operated with harmful externalities in order to maximize profit.
Greenengineer beat me to this one, but I would echo what he said. Of course Khosla operated with harmful externalities. Most industries do. And are you aware of some of the harmful externalities of the ethanol projects he is currently investing in?
You do show and immense amount of disrespect to Mr Khosla. As I’ve said before you are totally clueless about how the private investment industry operates which is where Khosla and thousands like him operate. Their investment decisons are not made on 100% data/information accuracy. If they did companies such as Apple, Intel, Cisco, Google etc. etc. would never have seen the light of day. They operate in the HIGH RISK HIGH TECHNOLOGY INVESTMENT industry. Which bit don’t you understand?
Grow up and pick someone your own size preferably a minion in the oil industry.
As I’ve said before you are totally clueless about how the private investment industry operates which is where Khosla and thousands like him operate.
As I recall, you also said that Big Oil has lobbied to water down CAFE standards. You couldn’t back that one up either when I challenged you on it. What don’t you start saying things that you can actually back up?
They operate in the HIGH RISK HIGH TECHNOLOGY INVESTMENT industry. Which bit don’t you understand?
It is clear that you are the one who does not understand, so let me spell it out for you. I have no issue with Mr. Khosla’s investments. He can risk his money all he wants. He has picked some real winners and done quite well in high-tech. However, he now wants to risk my money. He wants to risk our energy policy. Do you see the difference? Khosla has promoted a particular energy policy, and used false or very misleading arguments to do so. I take exception to that. As a Khosla sycophant, perhaps you do not. But hopefully you are intelligent enough to see that it is not Khosla’s investments that concern me. It is his influence on energy policy, when this is well outside his area of expertise (and it shows). Get it? See my latest essay if you still don’t get it.
Cheers,
RR