Guest blog by Manny Topiques Here are some interesting and somewhat offbeat energy stories that haven’t gotten much media attention over the past year.
Is coal the new future for clean energy? In an amazing new discovery just announced by NASA (National Aeronautics and Space Administration), the Perseverance Rover discovered an outcropping of high quality space coal not far from the spacecraft’s 2021 landing site. Using its rotary percussive coring drill, the rover was able to penetrate approximate 6 meters below the planet’s surface to confirm that this outcropping was the surface exposure of a large deposit of anthracite space coal. Further exploration on future missions will be required to determine if this deposit is native to Mars or the remains of a meteor that impacted the surface in the distant past.
OWOE has pointed out similarities between today’s Big Oil and last millennium’s Big Tobacco several times over the years. In September 2022 we published “Don’t Blame the Suppliers, Unless They Are Big Oil” where we shared articles documenting the efforts of the fossil fuel companies to engage in a public relations campaign to sow doubt in the science of climate change by following the playbook of the tobacco industry. And in August 2023 we published “Big Oil Stuns Again” where we addressed the greenwashing that the oil companies are currently engaged in and speculated that Big Oil’s lack of civic responsibility might become legal liabilities in the future, similar to what happened with the tobacco industry. Recent events have made it even more clear that, yes, Big Oil is following in the footsteps of Big Tobacco and is likely to meet a similar fate.
Bill Luyties, OWOE Technical Editor: There is no doubt that the world needs oil and will continue to need it for some time while the transition to renewable energy plays out. There is also little doubt that that burning of fossil fuels and associated carbon dioxide release into the atmosphere have contributed greatly to the current crisis that is global warming (see 97% of active climate scientists agree). Examples of the impact on the world’s climate are all around us – from the record-breaking temperatures around the world, to the forest fires in Canada, California, Spain, Greece, and Hawaii, to the melting glaciers in the Arctic and Antarctic and rapidly rising sea levels. So, where does Big Oil fit into this ongoing transition? The last several years have seen Big Oil, which has been the source of much of the public misinformation about climate change, pushing the narrative that they will be part of the solution. How is that going?
Blog by Bill Luyties (OWOE Founder and Editor): Over the past few weeks, I’ve had multiple articles pop up on my news feeds that proclaim that an EV can cost as much to drive per mile as an ICE vehicle. These all appear to be based on an Anderson Economic Group report titled: Real World Cost of Fueling EVs and ICE Vehicles (2nd Edition), dated April 2022 but apparently not issued until early 2023. One article headline actually shouts: Shocking study finds EVs cost more to fuel than gas cars in late 2022. While I generally feel that the Anderson study did a good job of trying to compare costs, the authors of these news articles ignore most of the study and focus on a single headline-grabbing finding that for mid-priced cars EVs cost about the same as ICE cars when charged at home, but cost more when using commercial chargers (see Figure 1). This may well be true today, but the Anderson study and these articles miss the real point – such a comparison is misleading and almost totally irrelevant for a number of key reasons.
Blog by Bill Luyties (OWOE Founder and Editor): I had the opportunity and pleasure to visit the Floating Wind Solutions (FWS) 2023 conference in Houston, Tx, last week and thoroughly enjoyed the three days of exhibits, presentations, networking, and reconnecting with colleagues. This was the third annual FWS and by far the largest and best attended with close to 90 exhibitors and approximately 800 attendees. The mood of the participants was very upbeat, as floating wind has experienced a number of positive developments over the last year. While there are still key hurdles to overcome, the industry appears to be on the verge of taking off.
Venezuela has the largest proven oil reserves in the world, reported at 303 billion barrels in 2019 (BP Statistical Review of World Energy), and yet only produced 723,000 barrels per day (MBPD) in August 2022. In contrast, Saudi Arabia is a close second in total reserves at 298 billion barrels, produced 11 million barrels per day (MBPD) that month. That is, with essentially the same reserves, Saudi Arabia produces over 15 times as much oil. The history behind the collapse of the Venezuelan oil industry is a clear lesson of the failure to understand how to manage a critical natural resource in today’s complex, interdependent world economy. If we turn to Russia, before the invasion of Ukraine it was producing 11.3 MBPD and was the largest exporter of oil to the world’s markets at 7.8 MBPD in December 2021. About 60% of those exports went to European countries. Given the West’s determination to end its dependence on Russian oil coupled with the impact of Western sanctions on Russian finance and industry, it is not hard to see the collapse of the Russian oil industry and a new oil-rich but oil-dysfunctional country ensuing, one which we will start referring to as Eastern Venezuela.
Bill Luyties, OWOE Founder and Technical Editor: Last year OWOE published a blog titled “Don’t Blame the Suppliers. It was intended to help focus the narrative related to climate change from attacks on the supply side of the contributors to climate change, i.e., the big oil companies, to the demand side, i.e., consumers who want big cars and to buy lots of everything. However, since that time I have come across several articles published by the BBC: one published in 2020 titled “How the oil industry made us doubt climate change” and another published earlier this year titled “The audacious PR plot that seeded doubt about climate change“. These articles document the efforts of the fossil fuel companies to engage in a public-relations campaign to sow doubt in the science of climate change by following the playbook of the tobacco industry from several decades earlier. Thus, I would like to update the title of that blog to “Don’t Blame the Suppliers, Unless They Are Big Oil”.
OWOE Staff: The battle against climate change is not going well. President Biden’s climate agenda has fallen apart. Russia’s war in Ukraine and its fallout within Europe has led to an increase in coal power and a push to increase world oil output. Germany is proceeding with plans to shut down its last 3 nuclear power plants in December which will eliminate 6% of its annual electricity generation and 11% of its non-fossil based generation. World oil production which peaked in 2019 at 99.7 million barrels per day before the Covid pandemic slashed demand has risen back almost to pre-pandemic levels and is expected to exceed those levels in 2023. We can all lament those factors as lost opportunities, but there are two factors driving Americans’ behavior that make OWOE seriously question whether any real progress can be made. We call them NIMBYism and IWINYism. We will address NIMBYism, or the Not in My Back Yard syndrome, here and cover IWINYism, or the I Want it Now or Yesterday syndrome, in a future post.
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).
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.
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!
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 newgasoline 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.