Category Archives: Blog

Can we turn the Ukrainian tragedy into opportunity for the planet?

OWOE Staff: The Russian invasion of Ukraine is a tragedy on many fronts – for the civilians caught in the crossfire, for the concept of democracy, and for the rest of the globe that will certainly feel the impact of economic sanctions imposed in an interconnected world. One impact of those sanctions in the US can be seen in the sharp rise in gasoline prices. In high-priced gasoline states like California, gas prices at the beginning of this week reached an average of about $5.40/gal (up about 10% from the previous week – see Figure 1).

Figure 1: Gasoline Price Increases from March 1 to March 8

Such a sharp increase, especially coupled with inflation stemming from the Covid pandemic stimulus packages and more recent supply chain issues, is certainly going to have a significant impact on Americans. Other impacts of the sanctions, including the US banning of Russian oil imports will create another round of challenges. US companies curtailing business in Russia will see impact to their financial bottom lines which will have a follow-on effect on the stock market. And now we are now getting warnings that prices for other commodities that Russia exports to the world have become volatile and are surging. But can something good come of this?

OWOE believes that the world can use this opportunity to step back and reassess how it moves forward to address the challenges of energy security, energy transition and climate change. In particular, how we can change our dependence on fossil fuels from a supply-focused approach to a demand-focused approach? This has been a recurring OWOE theme (Don’t Blame the Suppliers; The Fundamental (and Somewhat Existential) Source of Climate Change – and How We Might Overcome It). And just recently, Hal Kvisle, a former chief executive of TransCanada Corp., was quoted in BNN Bloomberg as saying: “Until consumers have other alternatives, other ways of getting around, or other ways of heating their homes effectively – until we address the demand on the consumer side – we’re not really going to change the balance”. Prior to the Ukraine invasion, the Covid pandemic dominated not only the news cycle but our daily lives. In 2020 the demand for gasoline (i.e., oil) dropped dramatically to a level not seen since the mid-1990s. This was driven in part by the economic stagnation during the first year of the Covid pandemic, with many people losing their jobs or being forced to take time off work and many others forced to work from home. As a result, transportation by both vehicle and plane dropped dramatically. Figure 2 shows petroleum consumption history from 1950 through 2020, with consumption by the transportation sector dropping from a yearly average of 14.1 million barrels/day in 2019 to 11.9 million barrels/day in 2020.

Figure 2: Petroleum Consumption (EIA February 2022 Monthly Energy Review)

But we managed to survive. Then in 2021 as many of the Covid restrictions were lifted, people started to return to a normal life, and, driven by the pent-up demand from the prior year, oil consumption surged. In November 2021 consumption in the transportation sector jumped up to 13.7 million barrels/day, or just 3% under the 2019 peak, as shown with the added data points.

The first conclusion that can be drawn from these numbers is that, with the right behavior, banning Russian oil imports should have essentially no impact on the US economy. In 2021 average oil imports from Russia were 672,000 barrels/day. That was only 5% of transportation needs (and only 3% of total oil consumption of 23.2 million barrels/day across all sectors). Loss of all Russian barrels would mean the November 2021 transportation consumption would have been about 13 million barrels/day, which would still have been well above the 2020 value. Given that Americans in 2022 are now driving on average 14,263 miles/year (on track for 3.2 trillion miles total) and that the average car in the US gets 23 mpg, it would only take a decrease of about 25 miles per year per vehicle to eliminate completely the need for the Russian oil imports. Certainly, support of Ukraine against Russian aggression is worth driving 1/2 mile less each week.

The second conclusion is that we now have a very good data point for what behaviors can quickly result in a 10-15% reduction in oil consumption, i.e., the 2019 to 2020 drop. This drop was not driven by the cost of gasoline; it was driven by a much broader reduction in demand. While a Covid-scale drop might be too aggressive and costly to the economy, an intermediate value seems very doable. Let’s continue to support clever ways to work remotely and reduce commuting; let’s focus on energy efficiency with electric vehicles, LED lights, home insulation, etc.; let’s scale back our rampant consumerism; let’s walk and bike more in place of driving. These are easy technology changes that can be made with minimal impact to lifestyle and the overall economy and could be greatly enhanced with government encouragement, including ad campaigns and incentive programs. The result would be a huge step forward in the US effort to reduce oil imports, and, concurrently, reduce greenhouse gas emissions and help slow global warming.

OWOE also notes that we have been pointing out the risk that dependence on oil supplies from non-democratic countries creates for several years now. See OWOE blogs: Is There Any Limit to How Dumb Can Governments Get?, It’s a Mad Mad World of Energy,  Time for a New Energy Policy, etc. This crisis appears to be the catalyst might make that a reality. The European Commission just published plans to cut EU dependency on Russian gas by two-thirds this year and end its reliance on Russian supplies of the fuel “well before 2030”.

Hopefully, the Ukrainian tragedy can be used to change the mindset and approach of governments around the world. We’ve proven that we can live with less oil; now we need to make that the norm. It is time to eliminate dependence on Russia for any commodity, moderate our seemingly limitless demand for fossil fuels, and save the planet!

Will California Take a Huge Step Backward?

OWOE Staff: California tends to be a polarizing state. As the most populous US state and what would be the 5th largest economy in the world if it were a country, as the home of the television and movie industry, as the home to Silicon Valley with its technology leaders and billionaires, and as the home base to many environmental organizations, it has always been a trendsetter. In the battle against climate change, California has been a leader. It is the #1 state for installed cumulative solar electrical capacity by a factor of about 3 over the #2 state (Texas). It has the highest volume of Electric Vehicles owned of any state by a factor of about 7 over the #2 state (Florida). It has required higher vehicle emission standards than the rest of the US since the 1970 Clean Air Act. It has set a goal of 100% clean electric power by 2045. It has banned the sales of new gasoline powered automobiles by 2035 and is moving toward accelerating that to 2030. Progressives and those concerned about the health of the planet love these programs. Conservatives and those beholden to the fossil fuel industry hate these programs. But, suddenly, California is making a move against residential rooftop solar power as in Florida, where utilities argue that rooftop residential solar affects their business model. That’s correct; suddenly California is limiting the ability of its residents to achieve both energy independence and greatly reduce the State’s overall carbon footprint.

Continue reading Will California Take a Huge Step Backward?

Sowing the Seeds of Confusion

OWOE Staff: An OWOE contributor shared a BBC News article with OWOE staff regarding the possible construction of four (4) Small Modular Reactors (SMRs) in the UK. This would be a demonstration project for nuclear reactors based on nuclear submarine technology that some companies are touting as a key contribution to the sustainable, renewable energy mix of the future. The following day Rolls Royce announced that it had procured sufficient funding to develop its SMR concept that would trigger additional funds from the UK government to kick-off the project, with the first plant targeted for completion in the early 2030s. A further BBC News article referenced these Rolls Royce SMRs again, along with barge mounted SMRs being developed by Denmark’s Seaborg Technologies. The problem here is not with the projects themselves or the technology, but with the way they are characterized to the public. To quote the first BBC article:

Continue reading Sowing the Seeds of Confusion

Don’t Blame the Suppliers

OWOE Staff: The energy world has been rocked by a number of crucial events during the past two months. In the transition to renewable energy and more particularly in the removal of fossil fuels form the energy mix, there are possibly three history-making game changers: Don’t get me wrong – I have nothing against environmental activists who are trying to save our planet. In principle, I support most of the stated goals of these individuals and organizations, and of all the people I greatly admire, Greta Thunberg could well be at the top of my list. But the recent focus of these activists on shutting down big oil, closing nuclear power plants, blocking new pipelines, banning plastic straws, etc., is misguided. Yes, all of these are contributors to global warming and other forms of pollution, and yes, the world would be better off without all of them. However, the problem is that these things represent the supply side of the economic marketplace. They are there because people want them, either directly – we want gas to drive our cars, or indirectly – we want to buy lots and lots of stuff that takes energy to manufacture and transport. Cutting supply does not solve the problem if the demand remains: cleverer or less scrupulous players will gladly jump in to fill the void. And, at the end of the day, all of us will likely be worse off.

Continue reading Don’t Blame the Suppliers

Nuclear Power: Climate Solution or Hype

OWOE Staff:The energy world has been rocked by a number of crucial events during the past two months. In the transition to renewable energy and more particularly in the removal of fossil fuels form the energy mix, there are possibly three history-making game changers:

  1. The International Energy Agency (IEA) came out with its report on the state of the climate, and it was brutal toward fossil fuels. It laid out the reality of the current climate crisis and pointed to one clear action required to prevent catastrophic global warming: “The world has a choice – stop developing new oil, gas and coal fields today or face a dangerous rise in global temperatures.” It is important to point out that the report didn’t call for the immediate elimination of fossil fuels as energy sources. The IEA understands the need for some transition period to a fossil-free future. But the transition needs to be speedy, and the IEA feels that the best way to do this is to stop all new developments, live off the current reserves, and use that time to develop the technologies, change behavior and make the transition.
  2. President Joe Biden issued his sweeping climate goal to cut US emissions in half by 2030 ahead of convening an historic summit with 40 world leaders to demonstrate American leadership in the quest to elimination of fossil fuels by 2050.
  3. ExxonMobil, Royal Dutch Shell, and Chevron were rebuked by shareholders and the courts for not aligning their strategies with the threat of climate change. 
Continue reading Nuclear Power: Climate Solution or Hype

What’s up with the Texas power grid?

OWOE Staff: So what’s going on with the power grid in Texas? Last week the state was hit by a polar vortex winter storm (Uri) that brought snow and ice and record low temperatures. Such storms aren’t especially rare – it snows and ices in Houston about every ten years. But this time it created one of the biggest power outages in US history (Fig 1), and the Texas power grid came within minutes of failure. Then the real fun began. The Governor blamed the power failures on the wind turbines in West Texas freezing up, but had to retract the comment almost immediately when the grid operator, ERCOT (Electric Reliability Council of Texas), announced that the majority of the power outages were due to gas supply shortages and freezing of the conventional thermal power plants. A former Texas Governor claimed that Texans would rather endure power failures than have more regulation of the industry. Senator Ted Cruz, from Texas, who had a history of denouncing renewable energy as the cause for California’s power outages fled the cold to take his family to Cancun and immediately had to fly back due to public outrage. A photo of a helicopter deicing wind turbines in Texas went viral as an example of renewable power being dependent on fossil fuel and chemicals, until the photo was identified as actually being an extreme case of deicing an old-style turbine in Sweden from 2014. Texans who signed up for electricity plans that charge based on wholesale electricity prices are now facing bills in the thousands of dollars. Etc, etc.

Continue reading What’s up with the Texas power grid?

Time for a New Energy Policy

OWOE Staff: It’s a new year, we have a new president and administration, and we have new hope that the plan to vaccinate Americans is going to finally end the pandemic. What we don’t have is new thinking on what this country should be doing for a long term, rational and strategic energy policy. OWOE believes it is the right time to propose a comprehensive energy policy that balances America’s needs with the planet’s needs and is based on sound economics, realistic technology and good common sense. The OWOE energy policy combines several key elements, including: firm commitment to dramatically reduce dependence on fossil fuels in a planned and rational manner, sustainable investment in renewable technologies, and establishment of a North American Energy Alliance (NAEA) between the US and Canada to aggressively develop and globally sell our existing energy resources.

Continue reading Time for a New Energy Policy

A Look-back at 2020

By OWOE Staff: Happy 2021 dear readers and supporters of OWOE. As everyone is aware, 2020 was a most unfortunate series of events, beginning with the release of a virulent pathogen from China which resulted in a wide range of foreseeable acute and long range economic, social and energy consequences. Thus, OWOE staff are working hard to analyze these consequences to provide meaningful insight about energy matters going forward. We plan a variety of interesting updates to our core energy information, tools and blogs this year and perhaps even a contest involving energy self-sufficiency at the local level. Many of the changes happening in the world of energy are the cumulative results of individual changes in consumption resulting from economic turmoil compounded by inept government policies and continuing industry business practices.

Continue reading A Look-back at 2020

Coping with two crises

Note from your OWOE editor: Houston has always been a city whose fortunes have risen and fallen with the price of oil. Now it is being hit with two crises at the same time – the coronavirus pandemic which is significantly cutting oil demand, and the Saudia Arabia-Russia battle for market share which is flooding the world with oil and forcing down its price (see Fig. 1). The result has been immediate and drastic. The almost instantaneous drop in price from the $50-60 per barrel range to the $20-30 per barrel range is worse than the drop in 2014 that almost destroyed the US oil business, with some analysts predicting the possibility of $5/bbl oil. Oil companies are looking at every way possible to cut spending quickly, including cancelling projects, idling rigs, instituting hiring freezes, and laying off staff. Add on top of that the fear of transmission of the coronavirus and need for social distancing are having what could be a long-term impact on oil demand as well as making it even harder to work, assuming one is fortunate to keep a job in this climate.

Continue reading Coping with two crises

OWOE January 2020 Prediction – A US Legacy Carmaker will Disappear this Decade

It’s a new year and a new decade and time to make a bold prediction regarding developments in the energy industry and associated transportation industry. The last few years have been a wild ride for electrical vehicles (EVs) with Tesla continuously in the headlines. Will Tesla go bankrupt? Will Tesla change the way the world views automobiles? Is Tesla stock a good buy at $250/share (2019) or $550 (2020)? But other automakers have made their own headlines: Jaguar began sales of its iPace EV, Volkswagen began sales of its eTron, and Ford introduced its Mustang Mach-E. A prediction concerning EVs is warranted, but OWOE is going to go beyond EVs and make a prediction concerning the broader automobile industry: Within this next decade one of the three US legacy car makers will cease to exist.

Continue reading OWOE January 2020 Prediction – A US Legacy Carmaker will Disappear this Decade