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It is not just oil, but energy itself that is getting more expensive.
(shrugs)
Renewables are probably the best way to go, followed by nuclear, if one can overcome the political resistance. Either is better than the status quo.
Consumers struggling with $4 gasoline face ballooning costs for another energy source: natural gas.
Natural gas futures have vaulted 154% since its Aug. 27 low to $13.203 per million British thermal units on Monday.
The run-up has outpaced the rise in crude oil, which has doubled.
Consumers may not feel the full impact immediately, but continued high prices will push up monthly utility bills, if they haven't already done so. Americans often use natural gas for heating stove tops and water, but they see a bigger hit when they fire up gas furnaces in the cold winter months. Also, rising prices show up in electricity costs, with natural gas providing the fuel for more power plants across the country.
"The consumer really hasn't seen the impact of higher prices," said Chris Jarvis, president of Caprock Risk Management. "There aren't that many people griping about it yet."
High heating and electricity costs, along with record gasoline and food prices, could chill already lukewarm consumer spending.
Experts point 15 low supplies, strong demand and record crude costs for natural gas' run-up.
"The increase in prices has been pretty dramatic," said Patrick Armstrong, assistant economist with Moody's Economy.com. "You don't hear about it quite as much as you do with gas prices because people don't see the prices like they do when they go to a gas station."
Utilities have begun to pass on some of those costs to customers. But rate increases vary widely, depending on location and other factors, says Jim Owen, spokesman for the Edison Electric Ins ute, a trade group for investor-owned utilities.
As a heavily regulated industry, utilities don't pass on higher energy costs as quickly as oil companies do at the pump. They also have long-term contracts, insulating them somewhat from soaring market natural gas prices.
Xcel-erating Energy Rates
Xcel Energy (NYSE:XEL - News), which serves residents of Colorado and seven other states, has raised the price of electricity for customers by 15% in the first half of 2008 in Colorado, spokesman Tom Henley says. Xcel is proposing an additional 10% hike for the third quarter. Henley says natural gas prices are a key reason.
Nearly half of Xcel's power capacity comes from natural gas. The other big power source is coal, which also is soaring in price.
As for the natural gas that customers buy directly to heat their homes or water, Xcel wants rates in July that will be 38% above the year-ago period.
Pacific Gas & Electric Co. (NYSE:PCG - News), which serves Northern California, said it needs to raise electricity rates later this year and again in January for a total rise of more than 6%, says company spokesman David Eisenhauer. He cited rising natural gas prices, along with less hydroelectric power.
Eisenhauer notes 44% of the utility's electricity comes from natural gas-fired power plants.
Utilities rely on long-term contracts and other instruments, says Owen, shielding themselves from volatile spot and futures prices.
That helps explain why electric utility stocks have done reasonably well in recent months.
Also, utilities tend to use gas-fired plants for "peak" demand -- when there's more strain on the utility for power. Utilities often tap coal or other lower-cost energy sources first when there's less demand.
Natural gas provides about 20% of the nation's power, analysts say.
About half the country has used natural gas to heat homes since 2005, the latest year for which data are available, according to Kobi Platt, an economist with the Energy Information Association.
Nevertheless, Owen points out that as prices stay high, utilities will find it harder to avoid pricier natural gas -- and that will push more of them to raise prices.
Natural gas also is becoming a much larger part of U.S. electricity generation, rising 34% from 2002 and 2007, according to Platt.
When a region needs more power, the local utility often opts for gas-fired plants, which many see as cleaner than coal.
"Most of the incremental generation that has been built has been natural gas," said James Diemer, executive vice president with utility-consulting firm Pace Global Energy Services.
Gas-fired plants are quick to set up, so capital costs can be recovered quickly. Until recently, natural gas was relatively cheap.
But natural gas' futures are near their highest levels since the records after Hurricanes Katrina and Rita in 2005, when they topped $15 per million Btu.
A key reason: Supplies are tight. Natural gas in storage is 1% below its five-year average, the EIA reported last week. That might not sound like much, but this is the time of year when supplies should be ballooning, not scraping by. Natural gas is in high demand during the winter when furnaces are turned on.
"We are short," said Robert Ineson, senior director with Cambridge Energy Research Associates. "We are significantly short."
Supplies were in great shape in December. But a chilly winter -- and several other factors -- drained supplies as customers turned up their thermostats.
Also, the rising use of natural gas to power electricity softened supplies. As part of that trend, many industrial companies -- which have their own generators -- turned to natural gas from oil for their electricity needs as oil prices soared, Jarvis says.
Global demand also crimped supplies and pushed up prices.
The U.S. produces most of its own natural gas, but still buys 3% to 4% outside of North America in liquid form. Prices for liquid natural gas have been higher in other parts of the world, including Japan and Spain, so shipments to U.S. ports have softened.
Oil prices -- though a much more globally traded commodity -- tends to push up natural gas prices as an energy cousin to oil, analysts say. Crude is up about 40% this year.
"When crude oil goes (higher) ... everything just gets lifted," Jarvis said.
Experts caution prices from here could remain volatile. Consumers should hope for no big hurricanes or a sweltering summer that requires more natural-gas fired electricity, they say.
Ineson expects natural gas to cool, given the slowing U.S. economy and other factors.
"We see the market tightness gradually easing," he said.
It is not just oil, but energy itself that is getting more expensive.
(shrugs)
Renewables are probably the best way to go, followed by nuclear, if one can overcome the political resistance. Either is better than the status quo.
Hey RG, is there any good news today?
In economic/business news, not really. Higher prices for just about everything are coming down the pike.
We are skirting a recession if not already in one. I would say that given the run up in prices we are actually seeing living standards drop, although that doesn't quite show up in most commonly tracked economic data.
In science news, there are some interesting developments in astronomy, and another gene that contributes to some alzheimers has been identified.
Companies that build and make solar panels, and wind generators are seeing a pretty bright future, as I say here often.
Iraq and Afghanistan seem to be limping along a bit better than in the past. That is fairly good news.
Living standards globally are still better off than they were 20 years ago, but with the run up in food prices, those gains will probably evaporate as energy gets more expensive.
Energy=food
If you make energy more expensive and you make food more expensive.
All of this makes finding and developing renewable energy sources is probably the most important issue facing the world today. Drilling more oil, digging up more coal will only slightly push this down the road.
Sorry I can't be more rosy. Life for humans in general, from everything I see, is about to get a lot harder.
"followed by nuclear, if one can overcome the political resistance"
No, capitalist resistance.
Wall St won't finance nuclear plants, a tiny problem with McFlop's go-nuclear pipe-dream, because the payback is too long.
I *do* think that the human potential for innovation will keep the world from the doomsday scenarios a lot of people run around waving their arms about.
We are doing some very cool stuff in terms of finding new ways to be energy efficient, and that will go a long way towards easing the pain/effect of higher energy prices.
I think one outgrowth of all of this, is that the less-energy intensive technologies we are developing for manufacturing, and the green, renewable forms of power, will be well suited to countries in the "developing world".
After we get over our initial shocks and develop those technologies, by the end of my lifetime I see things getting MUCH better for the vast majority of humanity living on the edge of subsistance.
Nuculear plants are being held back by the stupid ass Chernobyl worry warts and envirowhackos. Not capitalists.
BUT
As energy prices go up, then the payback period shortens dramatically.
Nuclear will be there somewhere, but for a variety of reasons it will not be *the* solution that some seem to think it will be.
There are a lot of modern reactor designs that are waaaay safer and require less fuel/waste than there were 20-30 years ago.
I personally don't like the idea of creating all sorts of new high-value terrorist targets in the form of fuel/waste shipments though.
Better to build wind-farms and solar panels. They can't be used as components in dirty bombs like nuclear fuel/waste can.
NIMBY. (Not In My Back Yard)
"I want to locate a nuclear waste facility upstream from your house, and the shipments will pass within 5 miles of your work location. Is that ok?"
Your average joe becomes an instant "envirowhacko" when you talk about putting a plant in his/her area.
If nuclear is all that whippy, it would not have to have heavy government subsidies.
I would prefer to subsidize things that aren't prime terrorist targets, as I have already stated.
The nukes are coming. They are being bid by contractors all over the US of A as we speak.
Before I left Florida in 2006 I heard that they had 4 permitted and isn't Bay City going to add another reactor as well as one outside Victoria?
Also, Cheniere (sp?) and some outfit called TexSun I think will be building two LNG depots outside Corpus in the near future.
Make a difference in energy prices? I can't say, but the construction hands will be making decent bank for a few years.
I've heard 3 permitted and the Bay City one is a go.
Cheniere is actually going to build the LNG in Portland right next to the Sherwin plant down there. It's the same one that was started in 06 and stopped shortly thereafter. The dirt is all moved for them though to begin again. Not sure who is building it this time around though. I've heard a couple of different rumors about it.
Zachary isn't back on the Cheniere project? (I worked at Sherwin for many years and did work on the old Reynolds mud lakes to prep for the tanks. Sherwin supposedly has a sweetheart deal for cheap gas for their facility in exchange for all the engineering they paid for.). TexSun (Again, not sure of the name) is slated to be built in the cotton field between Sherwin and DuPont.
I also heard today that Florida Power and Light is looking to build a new facility across the highway from Sherwin.
I heard that Bechtel's relationship with Cheniere is once again solid (which the falling out of the two is what led to Zachry getting the job the first time around), but then last week a buddy from Zachry mentioned he saw the job on their "list". So who knows.
Bidding and permitting is all well and good, but I will believe it when they clear the inevitable lawsuits.
I don't doubt that nukes will be built, but anybody who says that they will be "cheap" or profitable is deluding themselves.
Nuclear plants have always had massive cost overruns.
Just for kicks I googled the phrase: "nuclear plan cost overruns" and got this gem from 1984:
"Sure," you say, "but that is from 1984, surely things have changed since then."The Energy Department's Energy Information Administration said the final costs for 77 percent of the plants now operating were at least double the pre-construction estimates.
Not really. Go through the google search's articles, and you find things ranging from the mid- to early nineties, and stuff from last year, all saying the same things.
Now we have a presidential candidate who advocates that we "be like France" and get 80% of our power from nuclear.
One of the bits that I found kinda saved me the trouble of crunching the numbers. I will quote it here:
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Sen. John McCain (R-AZ) made a stunning statement on the radio show of climate change denier Glenn Beck this week:
The Wonk Room, which has the audio, writes of the interview, " McCain Seemingly Agrees With Glenn Beck That Solutions To Climate Change Can Be Delayed. That is lame all by itself. But the statement quoted above is even more radical. McCain is repeating his little-noticed uber-Francophile statement from his big April 2007 speech on energy policy, "If France can produce 80% of its electricity with nuclear power, why can't we?"
Why can't we? Wrong question, Senator. The right question is -- Why would we? Let's do the math.
The U.S. has some one hundred nuclear reactors providing about nearly 100 Gigawatts of capacity (see here) and nearly 800,000 Gigawatt-hours of electricity, roughly 20% of total U.S. power. For the record, France has only 59 reactors, capacity of about 63 GW, generating 550,000 GW-hr (some of which is exported), covering nearly 80% of their usage (see here). [Note to Sen. McCain: France is a much smaller country than ours.]
What would it take for us to be 80% Nuclear?
We would have to quadruple the number of reactors to 400, which would take decades even if we could somehow return to -- and sustain -- the fastest decadal rate of U.S. nuclear plant construction. But that wouldn't mean just building 300 new nuclear plants, for several reasons.
First, by 2050, almost all of the existing plants would need to be replaced, so that is another hundred to build if we want to hit the 80% goal.
And then, since McCain is not a big booster of energy efficiency (his McCain-Lieberman climate bill has no substantive energy efficiency provisions in it at all), we have to deal with some 1.1% annual electricity growth, which means we'll need more than 600 nukes in 2050.
Third, McCain wants to switch much of our oil consumption to electricity (a strategy I endorse). As he said in last year's energy policy speech:
I'll work to promote real partnerships between utilities and automakers to accelerate the deployment of plug-in hybrids.... Fifty percent of cars on the road are driven 25 miles a day or less. Affordable battery-powered vehicles that can meet average commuter needs could help us cut oil imports in half.
We import more than 12 million barrels of oil a day. To cut that in half to 6 when EIA projects we will import over 16 in 2030 (see here), means replacing far more than 100 billion gallons of gasoline a year with electricity. If 80% of that electricity comes from nuclear power, then that is -- very conservatively -- another 100 nukes.
Bottom Line:
To satisfy McCain's odd desire to be like the French and get 80% of our electricity from nuclear power in the coming decades would require building more than 700 (GW-sized) nuclear power plants by midcentury -- more than one a month.
Although we have been unable as a country to agree on even one storage site for our existing nukes' radioactive waste (Yucca Mountain), the McCain plan would require seven such sites -- for a longer discussion of just what 700 GW would entail, see the Keystone Center's 2007 nuclear study discussed at "Nuclear Power No Climate Cure-All."
And remember that the Bush administration just signed a deal permitting all reactor fuel to come from Russia post-2020 (see here). McCain trusts the Russians so much, he wants to exclude them from the G-8 meetings. So where would we get all our uranium from?
Finally, in October, Moody's Investors Service said "new reactors would cost up to $6,000 per kilowatt of capacity to build" -- I'll be posting a longer review of nuclear costs soon, and suffice it to say, Moody's estimate is not the high end these days. Since $6,000 per kw is $6 billion per GW, 700 GW would require a cost of some $4 trillion, assuming there was no significant cost escalation from production delays and from the serious bottlenecks in the nuclear supply chain (see "Look up nuclear bottleneck in the dictionary....") -- and not even counting the cost of the uranium.
Dontcha think the country could find a better use for that kind of money in the effort to avoid catastrophic global warming and the harsh consequences of peak oil -- something better than committing this country to an ultimately unsustainable high-cost energy source for the entire 21st Century?
Apparently the GOP nominee thinks the answer is "no." Caveat Emptor!
For my fellow energy realists, I would add that it would take an astonishing effort just to have nuclear power in 2050 provide the same 20% of U.S. power it does today -- an outcome I am not inherently opposed to, but I certainly wouldn't devote yet more tens of billions of federal subsidies to, as McCain would, especially given the myriad flaws nuclear power has.
That's why I have little doubt that if we can move beyond the uninformed pla udes of people like McCain and ever really get serious about global warming and peak oil, then the realistic, affordable solution is at hand -- namely energy efficiency to avoid significant load growth, concentrated solar power to replace most coal, and wind power for plug-in charging. And yes, we'll still have some hydro and nukes and combined cycle natural gas turbines and/or cogen in 2050, and possibly even some coal with carbon capture and storage, assuming that industry ever gets serious about that possible solution.
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Link to source
You might not like the partisan slant of the article, but when he uses non-partisan sources like Moody's who are paid to be as right as possible, one has to really consider the the possibility that nuclear is not the solution that some seem to think it is being more probable than not.
Massive cost-overruns are a hallmark of nuclear plants. If you see the company that wants to build it estimate $100 million for the plant, you can safely bet that it will end up costing $200 million or more.
Solar and wind power, for all their drawbacks don't tend to have 200%+ cost overruns, and can, through simple tax incentives, be done in a free-market way that provides steady jobs for a good number of people over the entire country, in every community.
Last edited by RandomGuy; 06-26-2008 at 08:53 AM.
Further adding to the problems going forward with nukes is the matter of security.
In the past nuclear plants have had some security, but post 9-11 a lot of them have had to ramp up procedures, and any future plants will have to be even more expensive due to security considerations.
If you try to make a facility safe from 15-20 guys who arent' afraid to die, with explosives, large trucks, and assult rifles, you have added a lot of expense.
If you try to make fuel and waste shipments safe from a similar profile of attackers, you have added a LOT more expense.
How do you keep a semi-tractor trailor filled with radioactive waste/fuel safe from even one suicidal nutjob with a rental truck loaded with 5-10 tons of explosives intent on ramming it?
If you think nuclear is the way to go, you MUST answer this question. I await the response.
Dude, go and google this "Every ing Industrial project built over the last 25 years"..........they'll all look the same as your cute little search above.
Sucks doesn't it, but that's how contractors make money. They're called change orders and they're our friends.
Have you ever been to a nuclear plant? I've been to one in Florida and one in Arizona. I can ing promise you that a truck full of explosives isn't going to make it anywhere near where it has to get to in order to cause some damage. I can also promise that an airplane won't make it near there either.
Turns out I was wrong about only being two times more expensive...
source link
Ooopsies.
Sorry, but wind power and so forth don't suffer the same cost overruns.
I understand that cost overruns are common in construction. Nuclear seems to be much worse than other projects, though.
I don't know if nuclear is the way to go or not, but I do know the you spew on here as fact is absolute garbage when it's outside of your "economics degree".
There is a small little cement plant being built between SA and New Braunfels. Cost has gone up 75% since the project started. It doesn't ing matter what kind of job it is, it always happens.
And it's not the gov't fault, it's not the contractors fault, it's not the engineers fault..........it's no ones fault. It's just the way it works and has always worked.
Funny, but you didn't answer my question:
How do you keep a semi-tractor trailor filled with radioactive waste/fuel safe from even one suicidal nutjob with a rental truck loaded with 5-10 tons of explosives intent on ramming it?
Wind power eh? Funny, the cost of steel and concrete has gone up enough over the last year that guess what.............................................R eady............................................th ey're already overrun.
And you didn't answer my question, have you ever been to one? If you had, you'd know the answer.
Black Hawks stationed at the plant. Air Force on constant alert near the plant. 100's of guards armed with M-16's and very ty sense of humors.
8' thick reinforced concrete around everything that could actually cause damage.
etc, etc, etc.
The plant manager at one told me that a 747 could fly into the reactor and if you were standing inside of it, you wouldn't even know it happened.
Now, answer my question, have you ever been or are you just assuming it's an easy target?
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