Guest blog by S. A. Shelley: It is very difficult to keep up with all the energy changes in the world. Every week, some Big Government Agency, NGO, International Think Tank or Big Company proclaims some new solution to the looming global energy problem of too much of the wrong kind of energy and too often from the wrong place. While most of the analysts and prognosticators seem knowledgeable and well intentioned, OWOE analysts cannot conclude for certain that the resultant big government plans foisted through bureaucrats onto ordinary citizens are based upon sound knowledge and understanding of energy markets, resources, technology and costs. I emphasize technology and cost because most government edicts are based more upon woke and vote political expedience than anything technically attainable without causing significant long term economic pain, e.g., recent decisions to shut down nuclear reactors. Nor have governments shown themselves to understand the political issues of energy supply, as we now see with Europe stuck paying for Russia’s conquest of Ukraine. We have some insightful and interesting comments about the Russian war, but these won’t be discussed in this blog – maybe later.Continue reading 2022: Continuing the Year of Bad Government Decisions
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More interesting energy stories that you might have missed
Guest blog by Mr. R. U. Cirius: Here are some interesting and somewhat offbeat energy stories that haven’t gotten much media attention that OWOE readers might have missed.
Very Small Modular Reactors There has been a lot of press coverage for Small Modular Reactors (SMRs) recently, with some touting them as the solution to the world’s energy challenges to others expressing doubt that they can actually be successful (see also OWOE blog Nuclear Power: Climate Solution or Hype). However, a new version of these nuclear reactors has just been announced that may actually meet the high expectations. William Fences, the entrepreneur and philanthropist, and his company MicroPower, claims to have developed the first Very Small Modular Reactor (VSMR). This is a stand-alone suitcase-sized micro nuclear reactor for both private and commercial use. The reactor includes: molten salt nuclear fuel module, molten salt pump, thermo-electric battery with inverter to export power at 480v, water coolant system that connects directly to the home or business water supply, and auxiliary air cooling motor that plugs easily into a standard 220v power receptacle, all enclosed withing an easily movable case (see Figure 1). Although not yet available for purchase, MicroPower is planning to sell units with power generation capability ranging from 5kW to 50kW.Continue reading More interesting energy stories that you might have missed
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).
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!
Is There Any Limit to How Dumb Can Governments Get?
Guest blog by S. A. Shelley: The answer is no, there is no limit to how dumb governments can get in terms of irrational legislation, fanciful proclamations and of course impossible energy policies. There are a few fundamental things that governments need to do right for society to survive, let alone thrive. Amongst them are protecting their citizens from external threats (military or viral, for instance) and protecting individual rights to conduct commerce or disagree with the government. After that, arguments start about everything else that people think governments should do or not do. I won’t argue those points, but I will argue that governments all around the world, except for China, are being complete idiots when it comes to energy trade and transition.Continue reading Is There Any Limit to How Dumb Can Governments Get?
Where Does the World Stand with Respect to Oil Production at the Start of 2022?
Guest blog by S. A. Shelley: In early November of 2021, the UN’S COP 26 climate conference wrapped up in Glasgow with all sorts of politicians pledging this or that with respect to greenhouse gas emission reductions, renewable tech investments and invoking equity across the world. But really, what are the actions that followed those ballyhoo words bantered about in public? The staff at OWOE took at look at some of the subsequent oil production announcements away from the public spotlight. The following summarizes planned increases / decreases and shares what we found is the most amusing quote associated with each country’s plans.Continue reading Where Does the World Stand with Respect to Oil Production at the Start of 2022?
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
Hacking the Internet of Energy
Guest blog by S. A. Shelley: Earlier this year, the Colonial Pipeline, carrying gasoline and jet fuel from Houston to the southeast US was hacked. The perpetrators got away with 75 bitcoins, at the time worth just under $5 million US. Nobody really hurt, so no harm, right?Continue reading Hacking the Internet of Energy
It’s a Mad Mad World of Energy
Guest blog by S. A. Shelley: September 2021 has been an interesting month as energy supply crunches of all forms appeared all over the world. China is suffering from rolling power outages that are affecting residents and industry and the authoritarian government there has ordered traders and industry to secure as many energy supplies as quickly as possible. In Europe prices for electrical power and natural gas are climbing to record highs and in the UK petrol stations are running out of petrol to sell to consumers. Pressure on energy prices is starting to manifest itself in the United States as well, with California already experiencing an increasing number of rolling brownouts, sorry “flex alerts“. Traders are starting to buy options on future contracts for oil at $200 / bbl. They are not far off, with natural gas prices in Europe in terms of energy equivalent at $140 / bbl (see note 1).Continue reading It’s a Mad Mad World of Energy