April 21, 2010
In the last month, oil prices have been over $80 a barrel — prices were over $86 twice, fell, and are now back on their way up.
Gasoline prices are around $2.80/gallon, up from around $2.00/gallon a year ago and rising a little each week over the last month.
Heating oil cost has risen over the year from $1.40/gallon to around $2.20/gallon.
Natural gas is also up year over year, rising from around $3.50/MMBTU to around $4.00, and volatile, closing over $7 for a few days in the winter.
However, domestic US Coal prices are about even, down a little, this year (from $2.21/MMBTU to $2.14) — I guess the energy we produce at home can be less expensive. Too bad burning coal releases about 2x the CO2 of natural gas (and a great deal more than wind and solar).
How We Respond To Energy Price Changes
But it appears that only energy prices drive our behaviors. We tend to over-react in some ways (markets, producers, consumers), yet have remarkably short memories, and seemingly weak abilities to identify coming changes.
I do understand that many people are negatively affected (more…)
March 21, 2009
Black is back at Shell. Black gold. Texas tea. Green is out.
Oh yes, it’s the same Royal Dutch Shell that was so committed to renewable energy sources a few months ago. But they have had a change of heart. The Guardian reports:
The company said that many alternative technologies did not offer attractive investment opportunities. Linda Cook, Shell’s executive director of gas and power, said: “If there aren’t investment opportunities which compete with other projects we won’t put money into it. We are businessmen and women. If there were renewables [which made money] we would put money into it.”
I can think of three possible explanations for this change of heart.
- Shell doesn’t believe that climate change, or carbon trading is a significant enough concern for their bottom line to factor them into any projections. Perhaps this is because recent polls show the number of people thinking climate change is “exaggerated” has risen rapidly. In short, without enough popular support, they are betting that their business will continue as usual for the foreseeable future. Or…
- They never really meant to do anything in the first place, and it was all a big marketing gambit. Or…
- As renewable sources grow, Shell sees them now as a competitive threat to their core business.
Perhaps you’ll note that one of my possible explanations for their actions does not include their explanation, namely that renewables are not cost effective. They report that some of their investment is being aimed at carbon sequestration. I do believe that there’s an important role in sequestration, but whereas renewables are getting close to grid parity, carbon sequestration cannot possibly have any immediate revenue potential — it’s almost purely R&D and cost today. One would have to have a rather dismal view of renewables to fail to see how they could be at least as good an investment as carbon sequestration.
Maybe there are other explanations. These were just the ones that occurred to me. But I think some combination of these explanations accounts for the lion’s share of their decision. So how could a company be so … simplistic?
Maybe they’re just suffering the myopia that comes from being a leading, profitable company? After reading projections by BP of energy use in the future (which predict that in 20 years, only 7% of our energy will come from renewable resources), I have come to understand that the oil companies really have a very limited ability to see into the future. They seem to be constrained by their view of the past. Historically, corporations have not be particularly willing or good at predicting the demise (or major change) of the character their business. The ones that did survived (for example: IBM and Smith-Corona both made typewriters). Few people remember the names of the companies that sold candles and whale oil … before the electric light smote them out of existence.
Indeed, the survivors of major change are the ones who not just accept, but embrace the change as an opportunity. To be honest, I have little faith in just about any of the oil companies, at this point. It’s almost moot now to point out how badly GM and Chrysler have failed to recognize their demise, and I give a slight credit to Ford, only because it was clear three years ago that Bill Ford understood why sustainability was a goal worth pursuing.
I do think it’s curious to wonder if indeed my third explanation, that Shell sees renewables as a competitive threat, has any merit. Wind power has been growing very fast. Solar is making technical and scaling breakthroughs that change the equation a little. Obama isn’t equivocating about climate change, cap-and-trade, energy independence, or any other issue that tend to favor renewables and hurt fossil fuel companies. The science is not getting any less clear on climate change, and the regulatory landscape is solidifying.
Perhaps if I were Shell, I might realized that I had better damned well figure out if there’s any way in hell that carbon sequestration will work, and meanwhile, clean up my act a little and save some money doing it … but by no means cut into my core business. I think this is a (classic) short-sited, reactive, self-protectionist business response that has been the death knell of many former large enterprises. It makes sense, but only in the most narrow, unintelligent was of looking at the world. But then again, we’re not talking about people, who have capacity for intelligence — we’re talking about corporations. The two are different.
Suffice it to say that while I may have not gotten the correct explanation of Shell’s failure to adapt to the inevitable future, I am confident that in three years, I’ll be able to link back to this post, and the others I have written, and report how the fortunes of Shell and ExxonMobil have become more clear, and how they failed to do the right thing to evolve their businesses. Even when the facts were as easy to see as the back of your hand.
February 7, 2009
There have been a number of news items lately about how coal-fired plant projects are being canceled or deferred (the good news); but so are renewables projects like wind and solar installations (the bad news). But the cause is different. In the case of renewables, the main cause of reduction seems to be the absence of investment capital — last year was great, but now, things are drying up. Coal companies, on the other hand, seem to be responding to the increasing number of roadblocks being encountered in the building of new coal plants.
Two years ago, it was business as usual. But Fred Krupps and Environmental Defense lawyers had a rather major victory last year when they facilitated a reversal in which a planned 11 new coal plants in Texas were scuttled (well 8, actually) in favor of new investments in wind farms. To me, this seemed to be the turning point in the tide; since then a number of coal plant projects have been deferred or scrapped outright … in fact, most of them. During the Presidential campaign, the idea of clean coal was raised by all candidates, but this perhaps clarified the notion that good ol’ regular coal was dirty (which it most definitely is).
Then as “clean coal” kept coming up, some groups started pointing out that clean coal is fantasy. (more…)
November 26, 2008
A while back T. Boone Pickens announced a plan to build wind farms, then solar concentrators, all built on new smart energy grid infrastructure that would run up he middle of the US. For transportation we would move to compressed natural gas (CNG) to bridge the technology gap until fuel cells and electric drive cars were ready. It’s a bold 10-year plan. It sounds pretty good. In fact, his website has folksy guitar music and pictures of wind turbines. But something isn’t right.
It sounds in many ways like what Al Gore and the We Campaign promoted last summer. And also similar to what the incoming Obama administration proposes. And each of these is a good part of what Lester Brown says we should do in his book Plan B 3.0.
All the plans are bold and put short time frames on their implementations, mostly 10 years. This alone helps people see the parallels to the 10 year program to put a man on the moon: it seemed impossible yet got done in less than 9 years.
But there’s a sort of gassy smell about Pickens’ version. (more…)
October 21, 2008
On Sunday an article by Roger Lowenstein, a former reporter for the Wall Street Journal, appeared in the New York Times titled “What’s Really Wrong with the Price of Oil?” It’s pretty long, and thorough. He dispassionately describes the various forces affecting the price of oil, especially its price over the last year or so, in economic terms.
He’s pretty economically conservative, in my estimation, which is why I was surprised to see the following:
The way to avoid a repeat is to dust off an idea that Gerald Ford once proposed: a tax on oil. Ideally, it would kick in only if the price fell back to, say, $70 a barrel. The beauty of this tax is that, very likely, no one would have to pay it. The tax would merely serve as a floor — a new lower bound.
What? A tax on oil? Wouldn’t that make it even more expensive?
Then today, the Times has an article reporting on OPEC’s response to the slumping price of oil (which is nearly the same price as it was last year at this time). And then, an article on how alternative energy is going to have a hard time competing against these low energy prices.
All of these are related.
October 17, 2008
As the US Presidential election draws near, I have renewed hope that we’ll finally get serious about energy independence. In a moment of (uncharacteristic) optimism, I also think it may be the case that the financial crisis will provide the opportunity for us to take exactly the right kind of actions to address energy independence and a host of other issues.
(Of course, it could go the other way)
As I have argued before, energy, global warming, the economy, consumption, conservation, and even the Iraq war, obesity, disease, global food, and water issues are not separate. In so many ways, these issues are all linked. (more…)
October 4, 2008
I Mean it in the Best Possible Way
This week’s bailout/rescue was a pig for sure, and before it got passed it got even more porky in the application of several coats of lipstick. None of the add-on’s were in themselves bad in particular. But the timing was terrible; at a moment when people are conscious of the government’s sheer magnitude, we managed to add on another 100 billion dollars of so.
But I suppose that one man’s pork is another man’s passion, to paraphrase most terribly. And in the case of this bill, tax credits for renewable energy were … renewed. And unlike several other add-on’s, this one makes sense, in context. (more…)
May 21, 2008
Open parking lots are a blight on the landscape. They create “heat islands”, are poor at dealing with rain and snow runoff, have lights that generate light pollution and look ugly, and are unpleasant places to be in.
One technology solution promises to change this, the Envision Solar Grove. (more…)
April 5, 2008
Telephone rates fall in the evening and many people respond by deferring their calls. People with flexible hours commute to work earlier or later to miss the rush. My company’s website (and many others) does processing at night when load is low. If we use electricity at off-peak hours, the cost is less. And if enough people did this, we would actually use less energy overall to make the same amount of electricity.
How can that be? (more…)
December 24, 2007
Ok, I’m just an iPhone fanboy. This post is entirely off-topic — it has nothing to do with the environment, energy, conservation, or any of that. I should hate the iPhone. But wait. I love the iPhone, and thus, must rationalize my purchase, as I have done in the past with my TV, TiVo, and laptop computer.
Stick with me. Going a bit out on a limb, I believe the iPhone embodies something that gives me (some) hope that us humans will manage to think ourselves out of our global warming issues in three ways (more…)