As another example of the complexities of energy in today’s world, we have the latest controversy surrounding Renewable Energy Credits, (RECs – pronounced “wrecks”). A REC is a financial tool in the form of a certificate that represents the generation of one megawatt-hour of electricity from a renewable energy source. RECs are not tied to the physical delivery of electricity and can be bought and sold on the open market. For example, a utility that has been mandated to generate a minimum level of electricity from renewable sources can buy RECs as oppose
d to developing their own sources or purchasing green power from another provider. A company that produces renewable power earns RECs and can then sell them. The benefit to the purchaser is to be able to take credit for the green power and meet their commitments at an acceptable cost, while the benefit to the seller is receiving income to offset the cost of their investment. Continue reading Recent Controversy over Renewable Energy Credits
Monthly Archives: March 2016
The Human Side of the Oil Price Collapse
To the typical American consumer, the recent collapse in the price of oil is viewed as a good thing on several levels: 1) it means more money is available from income to spend on other fixed or discretionary expenses and 2) it means the evil oil companies are hurting. The downsides are rarely considered or understood. For example: 1) some of the highest paying professions in the US are in the oil industry and employees are being laid off by the tens of thousands, 2) economies in cities like Houston, and entire states like North Dakota, that are highly dependent on the oil industry are in a tailspin, leading to foreclosures, business failures, and reduced public spending, 3) oil companies that took on too much debt during the oil boom are declaring bankruptcy and defaulting on their debts, which has contributed to the recent stock market slide, and 4) one of the goals of the Saudi Arabian orchestrated price collapse, that of destroying the US shale oil industry and maintaining Saudi market share has been successful. Continue reading The Human Side of the Oil Price Collapse