DrumBeat: April 6, 2007
Posted by Leanan on April 6, 2007 - 9:04am
Topic: Miscellaneous
Companies are capitalizing on Canada's vast oil-soaked sands in northern Alberta, largely seen as a stable, long-term source of reserves in a friendly country unfettered by geopolitical uncertainty.But natural gas prices that are half or less the level reached after 2005's devastating hurricanes and the phasing out of tax benefits of Canadian investment trusts have prompted producers to pull back.
Study: Climate change could bring new U.S. Dust Bowl
The consensus of the models was that climate in the southwestern United States and parts of northern Mexico began a transition to drier conditions late in the 20th century and is continuing the trend in this century, as climate change alters the movement of storms and moisture in the atmosphere.The reduction in rainfall could reach levels of the 1930s Dust Bowl that ranged throughout the Midwestern United States, Seager said in a telephone interview.
Peak Oil Passnotes: Iran for All Seasons
Once again the short term and ultra-violent ambitions of a tiny number of politicians could end the lives of even more innocent people, and make the oil trading community some extra billions of dollars on the way through. We have been warned.
TXU Corp. says it could be forced to shut down some of its power plants if it can't settle charges by state regulators that it manipulated the Texas wholesale electric market.
Feds Defend LNG Fast Track as Clock Starts
In an unusual burst of anger from a federal official, a U.S. Maritime Administration official lashed out against a coastal activist who had just accused his agency of rushing a decision on the BHP Billiton liquefied natural gas terminal.
Escalating project costs jeopardizing expansion of Middle East oil and petrochem sector?
Despite an increase in industry cost estimates by two times to US$22 bln, Saudi Aramco and Dow Chemical Co are determined to continue with building a large-scale refinery and petrochemicals complex in eastern Saudi Arabia. Industry estimates put the cost for the complex at US$10 billion when it was first mulled over by Aramco and at US$15 billion last July when Aramco announced that it had selected Dow to enter into exclusive negotiations on developing the project. Current estimates peg the cost of construction at as much as US$22 billion. Governments in the Middle East are spending record oil revenues on building and expanding industries and infrastructure, leading to a shortage of contractors, raw materials, equipment and qualified labor, which in turn has driven up project prices.
Nigeria: How to make 'Liquid Gold' transform lives
The changes that have taken place in the last couple of years in Nigeria's oil and gas sector have thrown up a number of economic opportunities.
Kenya: Fuel Shortage a Show of Poor Planning
Western Kenya is threatened with fuel shortages because, we are told, the market is unable to meet increased demand.Rising fuel consumption, of course, is an indicator of a growing economy. But that should provide no excuses for any shortage because with proper planning, the marketing and distribution systems should be able to anticipate demand and plan accordingly.
Last time, we looked at the Government Accountability Office's (GAO) report on peak oil. More specifically, how it suggests we will increase our oil supplies. The third source for more oil it suggests is from unconventional sources--namely Canadian oil sands and the massive oil shale deposits located in Wyoming, Colorado and Utah.
[Founding member of Greenpeace Patrick] Moore, who is chairman and chief scientist of consulting firm Greenspirit Strategies and co-chair of a pro-nuclear energy group called the CASEnergy Coalition, said nuclear power could help wean the U.S. from its reliance on foreign oil and natural gas. It could also reduce the health effects of power plant emissions and save oil and gas for better uses, such as creating plastics, he said.
The missing link in Mexico's declining oil production
In a miraculous feat of journalistic legerdemain this morning, a lengthy, detailed front-page article in the Wall Street Journal reports on declining production at Mexico's giant Cantarell oil field, without once ever mentioning the words "peak oil."Reporter David Luhnow manages to achieve this while at the same time providing a textbook illustration of precisely why peak oilers are so worried that maximum production is nigh.
Gasoline use up 2.8% since early time change
In a bid to save energy, Congress moved up daylight-saving time by three weeks this year. But so far, the change appears to have backfired after Americans last month used record amounts of gasoline as they got out to enjoy the extra hour of sunshine.Average daily gasoline demand for the three weeks after the time change rose 2.8% from the same period a year ago and was the highest ever for the period, according to the Energy Department.
Some observers say the surge is linked to the earlier start for daylight-saving time, which began March 11 instead of the customary first Sunday in April.
Total, Shell Chief Executives Say `Easy Oil' Is Gone
The days of so-called ``easy oil'' are over, making it harder to meet demand without complicated and expensive projects, the heads of two of Europe's largest oil companies said today.
Experts: Energy security fears overblown
"Each of (the) fears about oil supplies is exaggerated, and none should be a focus of U.S. foreign or military policy," write professors Eugene Gholz and Daryl G. Press in the policy analysis from the libertarian Cato Institute in Washington.Much of the fears are centered on the concepts of peak oil, instability among oil-producing nations, competition for a finite resource from countries such as China and India, and supply disruptions in producing countries. Those who back these theories, the writers say, support U.S. efforts to stabilize -- or, alternatively, democratize -- the politically tumultuous oil-producing regions or call for U.S. military presence to enhance stability in those regions.
OPEC defends oil production levels
The OPEC oil group faced calls for increased output to help dampen rising crude prices on Thursday, but leading members stressed that geopolitical rather than supply concerns were driving the market.
Panel: Global warming a threat to Earth
An international global warming conference approved a report Friday warning of dire threats to the Earth and to mankind — from increased hunger to the extinction of species — unless the world adapts to climate change and halts its progress.Agreement came after an all-night session during which key sections were deleted from the draft and scientists angrily confronted government negotiators who they feared were watering down their findings.
In Tucson, Ariz., local consultants, small businesses, and nonprofits are leading water harvesting workshops that often have waiting lists – a healthy demand that's further boosted by a state tax credit for rainwater harvesting. The nonprofit organization that I direct, Watershed Management Group, teaches individuals how to install cisterns and shape landscape to harvest water. In dryland regions such as southern Arizona, harvested rainwater is sufficient to meet all residential landscaping needs. In a state where residents use 40 to 60 percent of their municipal water supply on outdoor uses, that's quite significant.
The politics and reality of the peak oil scare
For this reason Peak Oil Theory tends to come as part of a package which is about more than the production and consumption of oil. It also expresses fears about how society will be affected when the oil runs short. In essence, Peak Oil Theory is both about the economics of oil and a pessimistic vision of the future. In many cases Peak Oil is a theory that catastrophe is about to hit humanity. In the first half of this article, I ask if our future is inevitably pessimistic.
The shallow waters of the Gulf of Mexico, once a hotbed for natural gas exploration, are starting to look a little empty.In recent months, dozens of jack-up drilling rigs, which sit atop retractable legs that stand on the seafloor, have shipped out of the area. Left behind is the lowest number of the rigs seen in the Gulf in 28 years.
The rigs, which generally operate in 400 feet of water or less, are leaving for more favorable contracts in the Middle East, West Africa and Latin America, where rig supplies are tight and demand is high.
Solar 'competitive with coal' by 2010
The cost of the cheapest solar power could be on par with that of electricity from coal plants by 2010, according to Photon Consulting.The Boston, Massachusetts-based firm predicts that solar electricity will cost $0.18/kWh in Germany, $0.13 in California and $0.12/kWh in Spain by 2010 – while industry leaders will be able to bring that latter price down to $0.10/kWh, equivalent to the retail cost of electricity from a new coal-fired power plant.
Cheap, Efficient Solar Power: What’s Needed Now to Get There?
If solar power is going to play a significant role in the energy equation of the future, there must be advances in technologies to store that power and more investment by manufacturers, concludes a new federally funded study by University of Massachusetts Amherst scientist Erin Baker.
High fuel blends said crucial for ethanol
About half of the gasoline sold across the United States is blended with 10 percent ethanol, but that percentage needs to increase for ethanol to go from being merely an additive to a true alternative, said Don Endres, chairman and chief executive officer of Brookings-based VeraSun Energy Corp., one the nation's largest ethanol producers.
commenting :Solar 'competitive with coal' by 2010
Actually these news are really astonishing. It is well known, the pv-industry is growing very swiftly, but so far it was just a hope, the producing costs will go down close to the grid parity in some regions of the world. Now, that this point is reachable as close as 2010 is more than promising. "50% of residental customer in OECD countries“ is really a lot. Maybe there is a giant industry at the beginning of a very, very steep growth. Our cities and other settlements will look in future much more blue shimmering.....
It is clear, the producers will not give these prices to the customers immediately, because the market is by far bigger than the offered products. However, there are many large investments going on right now and the next years will bring even more investments in this technology. So this problem is only an economical not anymore a technological.
Just thinking. In the not too far future it will be normal for every new building to be equipped by pv panels simply because it pays of. I think this is good news....
Fortunately with recent developments in PV, the potential cost has come down significantly, as you have said. Because the cost of producing them is going down but the price offered to consumers hasn't come down as much, that means that the increased profit margins will increase new development and players into the market who desire to take a slice of that pie. At some point in time, the supply will be able to meet demand, and the prices will drop significantly.
Recently with companies such as NanoSolar have procured manufacturing space:
http://www.nanosolar.com/pr7.htm
NanoSolar's EROEI, according to their website, is under one month. Compare this to the EROEI on Vaccum based thin-film which are 1.5-1.7 yrs or poly/monocrystaline silicon panels at 3 yrs.
http://www.nanosolar.com/economic.htm
I haven't seen this on their website, but I do remember an article where one of the top guys at NanoSolar was saying that they're aiming at the cost of their panels to be less than $3/watt. I don't know if that was wholesale price or retail price, however.
Right now it's at least down to $4.41 for retail, as I've seen 170 watt Evergreen Solar panels at $749 each.
I believe that with large numbers of consumers having grid tied solar systems hooked to their homes that can offset a majority of the consumption, some of the stress that is placed on the grid can be taken off. (That's just me speculating, and not something I can back up with references, since the majority of TOD people are very good about backing up their claims with references.)
I'm excited about developments in solar PV even if I'm scared about developments in PO.
The potential demand is huge. I just found a english version of the of the press release (pdf). Here is one important point listed....
In 2006 the world market was around 2.6 GW. There is still a long way to reach the 150 GW or even the 300 GW. That's the reason why I think the market will characterized for quite a long time by a much bigger demand than supply.
The PV market is still at its beginning. Just take a look with google earth over any kind of city in the OECD. There are masses of buildings which can be equipped with solar roofs. After reaching grid parity this will be actually somehow mandatory.
Sure PV will not save us from the impacts tiggered by PO. Looking to Saudi-Arabia scares me as well. But we need to look forward and every step in this direction will help a little bit.
If these forecasts are valid, shouldn't be bet on the come now and stop all additional coal power plants or augmentations to existing power plants?
With respect to cost, I am a bit skeptical since it is not sufficient to bring down the costs of the solar panels. One must also bring down the costs of the inverters and other accessory equipment. From what I have seen at Solarbuzz, little or no progress has been made on these items. Of course, with very large solar generating facilities, perhaps these costs will be a small part of the overall cost. My main concern is with small installations put on residences.
From a personal persepective, I already pay extra in order to enable my utility to acquire more wind power as part of their mix. Would not most of us pay extra, even double, to support the phaseout of coal plants?
The TXU deal will, hopefully, be part of a trend, a relative greening of the utilities. The new owners, however, will still be building 3 additional plants. Any fossil fuel plants should just be part of the minimum necessary baseload to support wind, solar, and other renewables.
We need leaders with the courage and fortitude to move forward, leaders who will tell us that we need to move away from fossil energy even if there is a certain amount of blood, sweat, and tears. We need to move forward ahead of the economics.
The price of inverters has most certainly come down over the past 10 years. I did a few Google searches, and was unable to find a price history on inverters. However, I can tell you that from personal experience of purchasing inverters, that the price has certainly come down significantly in the past 10 years. You don't even see square-wave inverters any more (Thank goodness), modified sine wave inverters are dirt cheap (I've purchased 1.5KW sustained 3WK peak inverter for $100 USD) and pure sine wave inverters (which is what you would have to use in a grid tied environment) would have been absurdly expensive 10 years ago.
Most of that was due to the use of MOSFETs in inverter technology, which are substantially cheaper than prior tech used. I'm not an EE, however. (I just have nerds for friends and such tendancies myself.)
Even so, you're correct in stating that the inverters are a real barrier for solar penetration in the market. Inverters usually range around 1/3 of the cost of a solar installation. Hopefully further improvements will be made in this area.
Coal, along with nuclear, is a base-load power supplier. Very little of it is cycled on a daily basis to meet demand. Solar is a peaking power supplier, for it operates best noonish (or later or earlier depending upon the orientation).
To reduce coal usage, base load must come down considerably. Solar first and best replaces natural gas and to some extent the limited remaining oil-fired generators. To eat into coal, we will need more/better electrical storage capability, and even if that is available, the progression will be to replace oil, nat gas first before eating into coal.
We'll get there...it is just a question of how much pain is involved before we do.
Well one step is to redefine baseload, the present status quo utility definition is unacceptable. There's a lot to be gained from redoing our lifestyles based on when the most energy is available etc.
Moving away from fossil fuels isn't just a technological challenge, but also just as much or even more so a cultural one. But the way baseload is thrown around as some a priori fact, is not going to get us far.
"Well one step is to redefine baseload"
Good luck with that.
They have been talking about having computers in homes for years now, if you can have a digital programmable thermostat and irrigation controller why can't you have an electric meter that not only charges more for peak times but displays that somewhere (like on the digital thermostat)-the usage, cost, how much you could save if you turned the dryer off until later...
At this point it has to be right up in people's face to get them to conserve anything (most people, anyway)
re "Good Luck with that"
That's kind of the point of the whole site, isn't it?
I agree wholeheartedly with Brutus' point. We might pout and fuss that 'baseload electricity' is our non-negotiable demand to maintain this lifestyle, but any number of factors might jump in and interrupt the flow.. Uranium, Nat Gas, Coal or Oil supply 'complications', Grid failures, Weather events, Computer Glitches, etc etc.. It seems absolutely crucial that we start to find ways to handle electricity interruptions, and to be able to continue business and other parts of life, even if a grid failure occurs.
Clearly nuclear has some support to continue and try to hold the grid up.. but I don't trust the High-Finance Power Industry, the Poisonous Supply and Waste, and the Complex chain that the system depends on for massive, central power supplies, when gangable diverse technologies are available and structurally safer and more democratic.
Well goinggreen, good luck to us all, but if you really want to change the electricity system, you should challenge utility thinking once in awhile.
I was looking into that a while back & it's definitely all that 'other stuff' that gets to be a problem as the cost of the panels come down. In an off grid system (i.e., with batteries), PV modules make up 50-60% of the total installed cost (solarbuzz numbers); installation is around 20% and the inverter is roughly 7%. The batteries & charge controller are 25%. If you deduct out the battery & charge controller cost for a grid tie system then PV modules make up 67-80% of the total cost. So cutting the cost of the PV modules dramatically (say from $5/peak watt to $1/pw) would make a nice impact on the overall cost. At that point, the installation cost gets to be the next biggest chunk.
I would encourage everyone here to pick up a copy of "Solar Revolution" by Travis Bradford (2006). Bradford evaluates solar from the financial community's perspective and concludes that the days of the solar PV boom are not 20 or 30 years from now, but right now. Some of his key points:
- The problem that many analysts make when comparing the cost of PV to that of coal or gas is to neglect the fact that PV is distributed generation located right where the user is, which eliminates distribution losses and costs. Also, PV electricity production largely occurs during times of peak demand, so its output is inherently more valuable that a base losd plant runing 24/7.
- The key indicator to watch is not portion of current generation from renewables, which is regularly trotted out to show how insignicant renewables are compared to coal, gas, and nukes. It is much more important to look at the renewable portion of each year's new capacity additions. By some measures, wind actually was the largest in terms of new capacity addition of any power type in the US in 2006. In California, PV was actually a fairly significant portion of the new capacity addition for 2006.
- When evaluating what new capacity to add, there are a lot of huge problems with gas, coal, and nukes. From the financial community's perspective, the biggest problems with all three are the extreme risks and uncertainty of costs. What are your construction costs, fuel costs, emissions compliance costs? Can you even get a permit to build? Is there even going to be any natural gas avaiable for power generation? How long will it take to finance, permit, and build?
- Solar PV is unique in the power generation world in that you know all your costs, virturally to the penny, at the start of the project. You make power for a guaranteed period of 25 years with no uncertainty or risk. It is hard to overstate the importance of this fact. When you take risks out of the equation, the financial community can do what it does best, creative financial engineering. What you are seeing now in PV are offers for Power Purchase Agreements, where a financial investor will pay 100% of the costs to install a system and sell the output to the site customer for a guaranteed discount to the utility. Financial developments like this will have a huge impact on the ability expand the PV industry.
I can tell you from personal experience that the PV industry is absolutely booming here in California. My company's business doubled in 2006 compared to 2005. Sure PV is still in early adopter phase and starting from a small base, but at the rate its been growing it won't take long. Bradford believes that in just a couple decades, wind and solar will absolutely dominate each years new capacity additions.
Solaris, who do you work for?
I'm VP of a PV design and installation company in Southern California, and I'll have to leave it at that.
Why the secrecy?
There is a limited apllicability to solar - it is only useful for a few hours IF it is not cloudy during those hours. Solar will only ever prove useful for extra power, such as recharging the batteries of an electric car, or ones in the basement. If enough people add solar to their home, the local electric utility will have another 'hole' in its delivery requirements, one that is random. What will happen is that it will demand the right to charge you for the unused electricity, thus you'll be paying twice. The reason is that they can't vary their generation quickly, and have no means of predicting what load they must supply, so they must supply the normal, which costs them money.
James Gervais
James;
Respectfully, I don't think you know what you are talking about. Ask the people who have them if they think that those 'few hours' is proof of Solar's Unreliability, or exactly the opposite. PV actually DOES work on cloudy days.. it's just directly proportional to the (right freq's of) light available. Yes, the Sun goes down every day.. and it also comes up every day.. (Oregonians will have to just take our word here)
Any utility that tries to charge for unused KWH's will come to see how well they can convince those on the fence to start getting solar-security on their roofs, too, and commence to lose market-share. No, I suspect more utilities will start to create solar banks as part of their own generation security, since, as it has been repeatedly mentioned, those Few Hours of Sunlight are unsurprisingly also the hours of peak loads for Business and for Air Conditioning.. perfect correlation, and causation!
Make Hay while the Sun Shines.
Bob
Actually these news are really astonishing.
Not to me; free markets work. This is the most overlooked concept on this website. Peak oil believers just don't understand that people think up new ways to do things when there is a profit motive to do so.
"We can do anything now that scientists have invented magic."
- Marge Simpson
The thing about "free" "markets": everything that happens is cited as evidence that it "works."
What's a "market"? What makes it "free"? What does it mean to "work"?
Assume oil goes to $200/barrel, gasoline & heating oil & diesel spike accordingly. The rich grumble and get along. The poor starve to death in their cold "homes" (about to be foreclosed). Demand suddenly drops. Prices drop. The rich stop grumbling.
See? "Works"!
Amazing. Ingenuity and incentives can be substituted for declining oil and gas. Our problems are solved a priori.
Who'd a thunk it?
All these pin heads at TOD have been getting wrapped around an axle for, what is it now, 2 years?
I lot of us have thunk it. Opinions about the ability to conserve and substitute for declining oil and gas is what results in a continuim of opinion from the various categories of doomers through the various categories of those who believe that the problem can be mitigated or even solved. [Believers in instantaneous EOWAWKI to Cornucopians.]
My take on the matter is that we are in for a rough ride but although we are all going to die, most of us will probably die of old age ... perhaps with a sweater on, but of old age.
Silver BBs, not silver bullets. IMO improved PV technologies will probably be one of those silver BBs.
Look at the power of faith! Did you worship at the feet of mammon lately?
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
A profit motive, or a Convenience Motive, or a Safety Motive, a Comfort Motive. There are a lot of motives, and a lot of ways that people innovate. Your statement sort of conflates 'Free Market' and 'Innovation' as a definitive cause/effect.
The 'Free Market' is an ideology, and it CAN make sense, but like so many other 'isms', it doesn't exist in the pure, euclidian conditions that would make it so Perfect. Like Communism or Democracy, the pure idea may be wonderful, but it has to be able to bend and allow for some dirt in the gears, some human-imposed manipulation and mistakes, etc. And markets for things like Coal will not be 'perfect' because the Market doesn't price in all the costs,like BlackLung, Mercury Related health issues in downwind regions, Global Warming.. So the Market, left on its own would tend towards a cheap raw material (and it has), while blithely ignoring the devastation that some other 'customers' are going to have to pay for. Some market advocates would look at this as 'Self-correction'.. or maybe a 'discount'?.. I don't.
What seems astonishing about this news is that Solar is finally making headway against the unfair advantages, and our unthoughtful preferences for Fossil Fuels. The fact that it's happening now, at the eleventh hour, after we've had decades to see the Political, Health, Social and Economic effects of poor energy choices is less proof that the 'Markets Work', as it is proof that they 'Work too slowly', if you choose to consider Human Quality of Life (over simple Profit Motive) as a necessary element of our decisionmaking process.
Yes, water will naturally find it's proper level, but in the meantime, you and your family may well have drowned. We have to be more dextrous and vigilant than that.
Bob Fiske
Of course markets work. That's why I've been solidly behind a carbon tax and an extra oil tax (for terrorism abatement). We should be capturing the external costs and monopoly rents and using them to displace other taxes and change the monetary incentives. Those new incentives would eventually make fossil fuels irrelevant; instead, we're sending the money to people who use their wealth to perpetuate their position at the top of the heap and extend the damage.
Yes. Think of the hundreds of billions being invested in fuels which will be minimally existent in 50 years. Short term return mentality will kill us all. Give as little as possible to those bastards by minimizing fuel use.
So, Keithster, does this mean you'll be the first one on your block to go out right now, open your wallet and buy the PV array and pay to install it (along with required inverter & fuse box set up, wiring, etc.) on your roof or yard???
What's holding you back, buddy?
While the "free market/profit motive" does sort of work as you suggest, there is also the buyer end of the market at work here too. I know of people who would like to buy PV, people who have talked to me about it because I already have such equipment installed, but the problem for most of them is that they simply can not afford it. Maybe in the future.
Well, maybe too "in the future" they still won't be able to afford it. Maybe too the future of unalterable and intolerable climate change will be here now and installing PV arrays will be too late. Maybe then the "free market" and its Don't-Worry-Be-Happy-Everything-Will-Be-Fine nostrums will be kaput. Because maybe what's missing now is the political leadership linked to the willingness to get this stuff done now instead of always waiting until tomorrow for the "free market" to get the price just right.
But by then, tomorrow, as we are continually reminded by science, will soon be - if it isn't already - too late!
So please report back with your full report on how you've sent the right signal to the "free market" now -- Show it your money!
godraz,
I am not an economist (geosciences) but I think there is no real free market at all. Neither in North Amercia, nor here in the EU. The surge in PV was just initiated by the in-feed law in Germany and other promoting laws especially in Japan.
It sounds simple, but just a fixed guarenteed price, which decrease every year provided a reliable foundation for investments in this technology. Not any kind of enterprise can develop without some solid conditions for the future (I aplogize this sentence, but I hope you understand what I mean).
The in-feed law was first applied for wind energy in the early nineties and later it was extended to solar, bio and geothermal generated energy. Especially the solar (pv) was just the result of a compromise in the former Red/Green government here in Berlin. I think nobody expected it to be so succesful. Today it has been adopted in many other countries worldwide and made the german renewable energy industry the world leader.
Looking at other industrial areas? Car industry, withut the massive road building programme financed by the government, this industry wouldn't have become so big. Military, almost no private person buys big weapons. Every economical activity is somehow supported by legal measures and often by money.
----
Another train of thought. Suppose the PV solar roof will become common. The result will be less electricity consumption from the utilities. This will certainly reduce their income. So their prices will go up?!?. Hmm, might it be possible that maybe in the end the utilities will invest as well in solar roofs and will install the arrays on our houses? Just to keep control of the supply? We can see similar things going on in the wind energy sector. There the big (german) utility companies now start to invest hundreds of millions € in offshore wind farms... But I thin the PV is too decentralized and too much small scale....to let this happen.
Just thinking even further. How will it be in 20 or 30 years. Will it pay off to build a coal fired power plant today which will not sell anymore its electricity in 20 years on account of too high prices?
Marotti32,
I completely agree with you: "there is no real free market at all." Any such talk about one, as Keithster did, is inane.
What you tell of government instituted "in-feed [price paid] laws" is pretty much what I too think is necessary. But this stuff is not at all "free market," it's *market management* directed at achieving a particular and hopefully better outcome than one left up entirely to the vagaries of the so-called "free market."
As someone pointed out above (about coal), at present within the so-called "free market" are all sorts of hidden and subsidized costs that make a mockery of this concept, especially with respect to oil. If we were to calculate in all the costs associated with our defense budget and after care for the poor sods coming home wounded just to protect Middle East oil the price at the gas stations would accurately reflect that (never mind climate change adjustment costs). But it doesn't. (Instead, it comes out of our income taxes and the free marketers bitch about the government taxing us too much!)
It's this sort of fully transparent and accurate reflection of true end-product analysis costs that "free market" hucksters are loathe to ever acknowledge that drives me nuts.
If plug-in electrified vehicles become popular, as will happen with much more expensive oil, then the utilities will gain back demand.
This time though the demand will happen at night. Maybe the demand pattern will go back to how it was in the 19th century (pre A/C?) more at night and less in the day?
I wouldn't mind nuclear plants for the nightload and solar during the day, with wind coming when it comes.
Well said. This is a variation of my meme, which is spend those billions now on PV and wind. If you wait for the market to come up with the perfectly competitive price, it will be too damn late. If we really believe that solar will be competitive, don't wait for that day. Anything we do now to avoid the use of fossil fuels in the future is money well spend. Maybe some day, we won't need subsidies, but let's make sure there is a some day to enjoy this still beautiful planet.
It never ceases to amaze me how the free market calculation for individual or corporate profit is assumed to magically come up with a result of maximum wellbeing for mankind.
Besides, we all know that the best allocation of resources requires frictionless, accurate information. You don't need to spend a week at TOD to realize that sand is the one thing the Saudi's have more of than oil, and they pour pour tons of it into the gears of accurate resource reporting.
Mind you, I don't have a better economic strategy in mind, and even if I did, the last thing we need to do is to change the markets at the same time as peak oil, global climate change, and population pressures.* (They will change the market economy, anyway.)
Free markets do work, it's just that sometimes the work is a bit scary. Take Ford (Please). One in four workers will be handed the pink slip by the invisible hand of the free market. If you laid off 25% of the population of the United States, by pairing off states, starting with the least populated, the map of the USA would look a little different:
Ford's problems are manifold, but Occam's explanation is that their business was no longer properly configured for the market conditions.
We've just spent the 20th century configuring the whole world for cheap, abundant energy, a market condition that is literally changing under our feet.
*I was in an email discussion lately with a friend who mentioned threats to civilization in the same context as terrorism. After giving it a little thought I came to the conclusion that Peak Oil, Climate Change, and Overpopulation were the three greatest threats to civilization, and I was hard pressed to sort terrorism even close to my top three.
Or, for apocalypse peak oilers, if the idea or innovation is driven by a profit motive and/or supplied by capital from the current markets (e.g. tradable stocks, private equity, hedge funds, etc) then the idea or innovation is inherently evil and should be immediately dismissed.
This is purely hypothetical.