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77 comments on Energy Prices, Inflation and Denial
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77 comments on Energy Prices, Inflation and Denial
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Euan,
A vision of a low gas price future does indeed create the wrong impression. Last week I went to the launch of campaign to insulate existing homes. See
http://www.existinghomesalliance.org.uk/
The aim is to insulate 'up to half a million homes ...to cut UK carbon emissions by the necessary 80% by 2050'.
Yet this is totally inadequate because we will probably need to cut our gas demand by 50% in the next decade or so to prevent the UK's balance of payments going down the pan.
What's needed is a brutally honest discussion about future UK gas prices. I'm glad to see that the new BERR fossil fuel prices document at
http://www.berr.gov.uk/files/file46071.pdf
has a 'High High' category with gas a 92p/therm.
This price needs to be fed through the policy mill. It would make an awful lot of energy saving technologies (decent retrofit german Passivhaus insulation and perhaps even solar water heaters) cost effective, even taking into account the increased production costs.
(I have more to say on the historical affordability of domestic energy back to 1914, but that needs a bit more research and some pictures.)
Bob E
Euan, Thanks for another fine summary of the UK gas situation. Looking from the other side of the North sea I can already see the rising energy costs seeping into all parts of society. At the moment some food prices are skyrocketing. Natural gas primary products - plastics, chemicals, etc must follow soon driving the increased price level into our wallets :-).
We are going into new territory- economically, security of energy supply wise etc. Lots of trouble ahead.
What our societies should do now is to reduce the society "energy base load" giving us more fredom to act and adjust on situations we cannot foresee yet. Save, improve energy efficiency etc.
Society energy main end users are : building energy use 40% af societal energy use, Transport- some 25-30% and food (incl food industry) some 5-10%.
So we must start a permanent reduction there. As Bob mentions, some solutions are known- Passivhaus, but it takes time and money.
What is needed is Political leadership more than anything else.
As BoB E mention, Authorities are slow to adopt changes in energy prices in their modelling. I Can add that in Denmark the Ministry of finance presently use the IEA 2006 estimate for oil of 65$ in 2030-Fixed prices.... http://www.fm.dk/1024/visPublikationesForside.asp?artikelID=9763&mode=he...
Hopefully the IEA will publish more realistic guidance for our governments in the future.
Kind regards/And
Bob, having used up most of our own nat gas in record time, it is mind boggling for me that BERR can now produce a High, High scenario with gas at 92 p / therm in 2015. With spot price 62p / therm today I imagine this represents a below inflation rise in nat gas price - an explanation is required why a finite resource that is running out that is vital to UK and everyone else's interests should suddenly start appreciating in value below the rate of inflation.
Energy prices are rising exponentially - and I gotta assume that no one in government actually understands what that means.
I approach the energy depletion problem exclusively from an energy depletion and energy efficiency angle - for both energy production and energy consumption.
The only power we have in the UK over energy prices is to reduce demand and so I wholeheartedly support your initiative on home insulation. But the bar needs to be raised a lot, lot higher. I don't know how many homes we have, but I imagine we should be targeting 20 million.
The government needs to understand that this investment is a mighty tool against inflation.
The house I live in, in Aberdeen is pretty well insulated with decade old Douglas firm framed K glass windows. I will fit a wood burner and new condensing boiler this summer. The latter will cost £5K - Scottish Hydro Electric - why is it soooooooo expensive? This cost needs to come waaaaaay down - £2K and I'd order it tomorrow. I'll also add some more insulation.
Problem is, here in Scotland at any rate, the government has built vast amounts of sub-standard housing, and also poor schools, hospitals and public buildings. So while we try to conserve, the government will most likely be wasting like hell keeping energy prices high. Best sign off now before I go off on a rant.
We live in a free country with free markets - that means that the Government policy is to allow us, within the law, to make our own decisions about what to do with our futures - we can live where we want, work where we want, say what we want, buy what we want.
Even if they know that the gas or oil is running out in the UK, the Government assumes (since it has worked well for a very long time) that 'the free market will provide' by reponding to price signals. The UK Government promotes a climate where energy research can be carried out since they do not know which future technologies (if any) will be adequate.
When we wonder about the future price of energy the true answer is NOBODY KNOWS, but, rather than plainly saying that, people such as BERR or CERA give us predictions that are obviously wrong (to anybody, like you and me, that thinks about it) ... as you say, in the case of BERR not even meeting the government inflation target of 2%. The Government wants the people to think it is in some kind of control for as long as possible otherwise they will be voted from power - for better or worse it is the British way whichever party is in charge.
We get the governments we deserve unfortunately, but the alternative is worse. Politicians who ring alarm bells about this simply won't get elected and those who think they can sneak into parliament and then boldly leap out as peak oil advocates soon find the party system does not allow them a free voice. Perhaps democracy as we have known it is about to undergo it's own radical adjustment as it moves from a manager of consumer-industrial society to whatever comes next.
>>TO WHATEVER COMES NEXT<<
Aye, there's the rub.
What comes next could be extremely unpleasant and we now head into uncharted waters.
It is possible that Democracy and the rights of man are less to do with the enlightenment and more to do with access to energy.
Wood based societies such as Medieval Europe and Edo-Japan were highly feudal and rigorously class based. Coal, and later oil came hand in hand with Democracy as cheap energy enabled the common weal and an emergent middle class to spend time on other things than back breaking work and a dawn to dusk work pattern.
I would specifically refer to such things as the 'Mechanics Institutes' of industrial towns where young men , who left school at 13 were able to improve their lots by learning after factory shifts.
- Both about Engineering and politics and philosophy.
I would hazard further that the lot and empowerment of women is distinctly related to cheap energy and a the liberation from place by access to goods that run on cheap energy.
We could pass through one of many of several future states:
- Establishment (Army) Coup
- Elected and then perpetual National Socialism
- Dark age, later emerging as feudalism.
I doubt that OMOV democracy with consensual or even civilised adversarial politics will make it. It is simply unaffordable and it is a very recent flirtation conjoined with cheap energy.
Today, the nation that brought you the Magna Carta, the Forrest Carta, the Glorious Revolution, basically pissed on Habeus Corpus.
42 days for a FILTHY STINKING TERRORIST ! - sounds acceptable. Wait until they do you on some jumped up charge - maybe for reading this site, or disagreeing with the PM?
Who knows where this could lead...
We already know that Local Councils are using RIPA Terrorism legislation to snoop on rate payers. Britain is not immune. For every free-born Brit against these impositions, there is an anal, furtive, control freak who goes to bed at night wondering if someone, some where can be stopped from doing what they are doing and controlled.
Our same betters also left a folder full of Al Quaeda fun and naughty secrets on a train today. (Brutality + Incompetence is very Nazi...)
Do not expect things to stay the same.
That is true for Liberal, enlightened democracy as it is for energy and the economy.
Hey, enough of the mindless optimism!
Society in the middle ages just like that in the Ancient world was dependent on mining high grade resources, which are now gone.
Of course, it could be argued that the remains of our civilisation would provide an equivalent resource, but during the descent they would likely have rusted away.
Civilisation if a one-shot deal.
Of course, we might eventually reach the level of the stone age - shame that we used most of the best flints.....
http://www.oilempire.us/brazil.html
Brazil (the movie)
Monty Python meets the Department of Homeland Security
http://www.oilempire.us/peak-fascism.html
Peak Fascism
Of course this is the same BERR that forecasts that oil will be something like 70 dollars a barrel in 2020, with traffic levels 30% higher than now - hence the Department of Transport's bizarre determination to press ahead with more roads and runways. At least the UK airlines will have somewhere to park their redundant aircraft.
traffic has already "peaked" in the United States
http://www.road-scholar.org
despite this, no level of government anywhere in the US is calling for a moratorium on highway expansions
A 'One warm room program?'
From Mudloggers link to the Mail article
It is apparent that we will now in the UK whatever measures are taken have a massive energy gap, which will cause great suffering.
So how can we reduce this suffering?
It is too late to retrofit houses to Passivhaus standard, or to build out the generating capacity we need without using gas we won't have, so I am just focussing on emergency mitigation measures, rather than looking at loner term policies.
We have around 24million households in the UK, 3 million of which are in band F, the lowest insulation standards, and 9 million in band E.
There is no way we can bring this stock up to survivable levels in the time available.
What we could do is to bodge up insulation so that one room in every dwelling could be kept at acceptable temperatures - in Japan only one room is normally heated, so it is survivable.
This would have to go with a rationing system, so that the little heat we do have does not go to large houses of wealthy people, but keeps the general population alive.
This means the end of the 'free market' - Each house has a cut-off on energy.
Here is what we could do:
Loft insulation
Plastic bubble for windows:
http://www.simplycontrol.com/catalogue/insulation/default.asp
Greenhouse insulation, bubble insulation, snap mini kaps
Interior cladding, which reduces the usable space, but keeps you warm:
http://www.celotex.co.uk/
Celotex Insulation | High Performance Thermal Insulation Boards
These are not very Homes and Garden measures, but if just one room in each house is insulated the cost should be reasonable.
The bubble wrap for windows is very cheap, around £1.50 meter, so all the rooms in the house could have their windows sealed.
The greatest expense would be dry-lining the walls.
In an environment of high unemployment and hence low labour charges I would guess that about £2k might be enough to insulate.
Not every house in the country would need to be a public charge, so for back of the envelope you might have to pay publicly for half the stock.
So the total cost might be £24 bn or so, and it would not happen overnight, and would take time to get going.
Assuming that our masters realise that something is going on by around 2010, and taking 2015 as then year when we have lost really huge amounts of generating capacity, then a 4 year program night be realistic, so you are talking about £6bn a year.
At later stages then the use of air heat pumps etc could further reduce energy use - this would just be a basis on which to build.
What do you think?
Gardening leave for Gordon and 644 of his colleagues at Westminster (I'm letting Michael Meacher stay), and for most of the civil service that has advised them?
I would suggest garden leave - Bob tells us that fertiliser is in seriously short supply, and they have been one of the main sources of bs for years.
As part of the compost they would actually be of benefit.
Hi davemart,
This has all been done in Canada in the late 1970's energy shortages. Lots of lessons learned including that most heat loss is through cracks under doors and around windows, causing 100%air exchange in 30mins( easily fixed with silicone cement) and through ceilings and windows. In Winnipeg( can be as cold as minus 40(C and F) they add about 60cm(2 feet ) of insulation in roof space, while windows are double or triple glazed( can use plastic sheeting or buble wrap) but looks lousy.
The big problem with a very well insulated air-tight house, that requires almost no extra heat, apart from body heat, lights and cooking, is the build up in humidity, causing condensation and ice build-up on the insides of windows, requiring a heat exchange fresh-air circulation system. Paybacks were only one or two years in natural gas savings, at much lower gas prices in 1970's.
That leaves most gas for hot water and cooling, much harder to save if solar is not practical.
Solar thermal is practical even at the latitude of London, capable of generating around 50% of hot water needs, and it is further North than the heavily inhabited areas of Canada.
It would perhaps not be easy to prevent freezing in the climate there though - the person on this site who is likely to have information on this would be Paul in Halifax.
In Europe where they live at high densities hot water is pumped to the houses from co-generation sites.
A possible solution, although one I would not put my money on, is fuel cells in the home:
http://www.msnbc.msn.com/id/23451723/
Japan plugs into fuel cells in homes - Green Machines- msnbc.com
Euan, top marks as usual.
I also find it staggering/depressing that only the so called high-high scenario bears any relationship to today's prices. All figures for the low, central and high scenarios for oil and gas have already been exceeded for all dates. The gas spot price has doubled in the last year to 62p/therm and the high-high scenario uses 67p up to 2010 and only a maximum of 92p up to 2030, an increase of about 37%.
The insulation also needs to be applied to commercial premises not only housing stock. Highest standards need to be mandated for all new builds starting from now not 2015, builders have little incentive to make their houses more efficient than the minimum legal standards.
Similarly for appliances, there is no reason for builders or landlords to provide anything other than cheap appliances that use more electricity over their lives since they will not be paying the electric bills.
"new condensing boiler this summer. The latter will cost £5K - Scottish Hydro Electric - why is it soooooooo expensive" Condensing boilers are available from around £600 so some £4,400 is for labour unless you are having additional work done. As a landlord I find the lowest quotes for registered plumbers to be around £1,000 per day for labour:-(
The latest BP statistical review is out today on their website, free to download:-)
You are correct that energy standards will have to be tightened.
It is rather simpler to force upgrades in Commercial buildings, as it can be mandated more easily - the waste is vast, with lights left on all night and so on, which in one way is a good thing as savings will be simple.
Street lighting would also be a major target.
The rental market is also easier to legislate for than the private sector, as the assumption is that the landlords can finance the change, which may not always be true but is a working assumption normally used.
Looking further ahead for new builds I would argue that standards should also have the assumption that no or very little new build -over should be acceptable - IOW greenroof technology:
http://environment.newscientist.com/article/dn12710-green-roofs-could-co...
We would also benefit from a lifetime energy consumption assessment, so that the energy cost of concrete etc should be taken into account.
Regulations should also be tightened on the insurance market to ensure that non-traditional builds such as Cob houses are insurable - they are only non-traditional in the modern world, for hundreds or thousands of years many houses were built from mud and straw - this can probably be achieved through agreement with the insurance industry rather than direct legislation.
Settling on triple glazing would also reduce costs.
"the high-high scenario uses 67p up to 2010"
Oops, shouldn't have posted that as the spot price has today just gone to 67p and we are in the summer when prices are normally lower! so one more litle jump and the high-high price will be exceeded, wonder what they will then call it, unfeasibly-high, high-high-high??
I think they are calling it: 'I am going to stick my fingers in my ears and sing la-la-la-la - can't hear you!'
Hi Bob,
I wish you luck. 30 years ago when we were still fresh from the 1970's energy crisis the Canadian government had me give a series of community lectures in the prairies to make houses energy efficient.(We are talking minus 40*C)
The responses where people had to pay for improvements themselves was not very good. When the Govt offered to pay a percentage it did better.
Condo's and regular Builder built houses did just the bare minimum cost efficiencies so as to get the places sold.
The latest Canadian trend when credit became easy was for all the Immigrants to build Mega houses with massive window spaces and thousands of square feet of floor space, never a thought to having one day to pay a premium for heating them.