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Post by redwolf on Jul 14, 2007 9:41:49 GMT -6
I recently read a book called "The Long Emergency" by James Howard Kunstler. The book puts forward the possibility of oil depletion in the near future (historically speaking). If you think about how dependent our economy is on oil, the possibility of depletion is a very scary thought. Especially with the current energy policy of our government. Even if we don't run completely out, the increased price of oil that is hard to find and extract will cause extreme inflationary pressures on all aspects of the economy. Just look at what a temporary spike in oil prices does now. I'm not trying to be a fearmonger, but this seems like a very real possibility to me. Everything I read points to the likelihood that we have reached peak production and it is all downhill from here. The most conservative estimates put our supply at around 30 years. Oil is a finite resource. I also know I am dealing with experts on this board. I am not trying to insult anybody's intelligence. I am really looking for some answers. Do you think this is a real possibilty? If not, why? If so, how bad do you think it will get and how soon? www.oildepletionprotocol.org/
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Post by jeffolie on Jul 14, 2007 13:47:52 GMT -6
Coal is the solution to 'peak oil'. The US is the OPEC of coal with more than a 200 year supply.
The abundance of coal is offset by it polution problems. Conversion of coal to an acceptible liquid slurry and into a liquid fuel has been a reality since the Nazi's use of this technique. South African are still doing it. The US government has an active program to promote it.
Peak oil, even if it is as close as it promoters claim, will not be the end of modern society.
Coal is the most immediate answer. But solar energy is emerging as a distant but real possibility.
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Post by jeffolie on Jul 14, 2007 14:10:00 GMT -6
POLICY AND PROFITS by Roger Conrad Editor, Utility & Income July 14, 2007
Talking policy is cheap. Creating and implementing something that works is an entirely different matter. Just ask the army of politicians, bureaucrats, industry executives, academics, consumer advocates and analysts now working on major potential regulatory changes in the energy and communications industries.
The newly installed Democratic Congress has stated two goals for energy policy: promoting US energy independence from the increasingly volatile Middle East and curtailing emissions of greenhouse gases that produce global warming.
Clearly, there’s not a universal mandate for these goals. Super Oils like EXXONMOBIL, for example, have asserted that total energy independence is simply not possible or even desirable in an increasingly interconnected world. Rather, they argue consumers should always look for the cheapest energy source and let the market sort out winners and losers. Global warming has been even more hotly debated, though the scientific community seems roughly decided that carbon emissions are having an impact on climate.
Both goals are, of course, very popular politically, at least in theory. The problem the majority party in Washington has is how to weave legislation that can move both of them forward and garner enough votes to pass a divided US Senate with enough force to discourage an otherwise almost certain presidential veto.
That looks difficult even at first glance. And once you start examining the details, it’s even more problematic.
For starters, the easiest and fastest way for America to achieve energy independence is to burn more coal, both for generating electricity and powering vehicles. The continental US is commonly referred to as the Saudi Arabia of coal. We already get more than half our electricity from coal-fired plants and there’s plenty to displace the gasoline we use as well.
As for technology, South Africa’s SASOL and others have taken early 20th century coal-to-liquids processes to 21st century efficiency. A mass scale program to build these plants would quickly reduce demand for Middle East oil for use as gasoline. And a new generation of integrated gasification-combined cycle power plants--fueled by coal that’s converted into clean gas--would all but eliminate sulfur oxides, nitrogen oxides and mercury pollution without the need for scrubbers and other old plant technology, which still creates rivers of waste water and mountains of sludge.
On the other hand, the fastest way to reduce carbon emissions would be to convert the nation’s coal-fired power plants to other fuels.
And many environmental advocates have made fighting the use of coal--either for transportation fuel or generating power--a primary objective.
Some of these people champion a switch to nuclear power as a long-term solution for getting the nation off coal. But many, including some utility regulators and policymakers who ought to know better, seem to believe we can have a painless transition to wind, solar and conservation that will avoid using both coal and nuclear power--now 70 percent-plus of our power supply.
Obviously, if one could reduce or eliminate carbon emissions from burning coal, policymakers could have their cake and eat it, too. But simultaneously ramping up coal use and cutting carbon emissions is only possible if there’s commercially available technology to do the job. And while there are many ongoing projects to accomplish that, we’re still some years away from a commercially viable solution.
The technique of carbon sequestration, for example, proposes to take carbon from burning coal and “sequester” or store it in underground tanks. There it could presumably be processed into something saleable, much as waste from oil and gas drilling sites is processed by companies like NEWALTA INCOME FUND in Canada. But while there are motivated companies working on it, even the most optimistic project will be 15 to 20 years before anything economic is commercially available. And even then, the cost will mandate much higher prices for electricity.
Washington politics is fundamentally interest group politics. And with literally hundreds of billions of dollars at stake on this issue, the knives are out on all sides. When that happens, not everyone is going to be happy with the final policy.
Like the Republicans who ruled for the previous 12 years, the Democrats in the House of Representatives have demonstrated a great deal of unity in 2007. The US Senate, however, is a far more fractious place. Among the Democrats alone, interests range from a Midwest-based pro-coal crowd--including presidential candidate Barrack Obama--to the champions of renewables that dominate the western states.
Basically, anything that doesn’t at least somewhat mollify all of these interests doesn’t stand a chance of passing the Senate. That will be true even if a Democrat is living at the other end of Pennsylvania Avenue in 2009. Therefore, any resolution to the inherent conflict between promoting energy independence and curtailing carbon emissions will come first and foremost from the US Senate.
This week, two senators--Jeff Bingaman (D-NM) and Arlen Specter (R-PA)--stepped into this minefield with their version of climate legislation. In a very real sense, the pair represent opposite ends of the energy interest group spectrum. Bingaman was Senator Pete Domenici’s (R-NM) Democratic foil when the Republicans controlled the Senate, and the two have long been champions of nuclear power, renewables and technology-based solutions to energy challenges.
Specter, meanwhile, represents a state in the heart of coal country.
Their bill proposes a cut in US greenhouse gas emissions back to 1990 levels by 2030, with a 60 percent cut in current levels by 2050. It would be reached via a cap-and-trade system, similar to that which has dramatically reduced acid rain emissions over the past decade and a half, which would apply solely to utilities.
Utilities would receive some allowances to emit carbon dioxide and would be allowed to buy and sell them in the market place. Companies that reduced emissions over that time would be net sellers of credits, which would be increasingly valuable as caps were tightened.
That would benefit utilities that increase use of renewables and nuclear power, as well as those implementing carbon-reducing technologies at coal plants.
Utilities would also have the option of burning natural gas instead.
As I’ve pointed out in Utility & Income, that’s the course many company managements have indicated they’ll follow at least initially.
Gas emits less than half the carbon coal does when burned. Long term, however, this would have to be balanced against higher natural gas prices that increased demand would undoubtedly trigger.
For investors, there are two encouraging things about the Bingaman/Specter bill. First, it relies on market-based responses to carbon regulation, rather than government mandates about what companies should or shouldn’t do. That formula proved itself with the massive reductions in acid rain emissions under the 1990 Clean Air Act, just as pure government mandates have consistently shown their ineffectiveness.
Relying on market-based solutions doesn’t guarantee some companies won’t make classically stupid moves. It certainly doesn’t ensure state and federal regulators will allow companies to recover even prudently incurred costs. Regulatory support will be critical to success, particularly in the states.
It does, however, allow companies flexibility and the ability to chart their own course through this challenge without melting down financially, and possibly even adding to earnings as asset bases expand. And for those out front on the solutions, there’s a lot of money to be made.
The other encouraging thing is the broad range of support already shown by the utility industry. AMERICAN ELECTRIC POWER CEO Michael Morris, for example, was on hand at the unveiling this week expressing his strong support, though his company is the largest US producer of electricity from coal and the biggest producer of carbon dioxide as well according to an April 2006 report by the Natural Resources Defense Council.
On the other side of the spectrum, EDISON INTERNATIONAL CEO John Bryson--a player in drawing up California Governor Arnold Schwarzeneggar’s carbon regulation plan in that state--was also on hand. So were PNM RESOURCES’ Jeff Sterba and PPL’S James Miller, both early advocates of carbon caps. Ditto EXELON CEO John Rowe, whose company’s nuclear fleet makes it a major winner from carbon regulation.
We’ve yet to see much reaction outside the industry to the bill, which is still in its infant stages. At least one crucial Democratic constituency is already on board. AFL-CIO Secretary-Treasurer Richard Trumka pronounced the proposal “balanced and fair.”
Some environmental groups, however, are already attacking portions of the proposal, particularly a provision to cap the price of credits to ensure against a spike. Sierra Club global warming director Dan Becker, for example, called the “safety valve” provision a “giant loophole” in the bill,” which could create “a formula for inaction.”
At this point, there are literally dozens of potential bills circulating both houses on the subject of carbon regulation. Senator Barbara Boxer (D-CA), for example, is allegedly considering a tougher bill without a cap on the price of carbon credits. And her committee is likely to produce a bill. Also, this one’s still more broad strokes than specifics and will almost surely require weeks of negotiations before it reaches passable form. But it does set a very encouraging tone for the utility industry, and by extension investors.
My favorite plays remain wind and nuclear producers like DUKE ENERGY, Exelon and FPL GROUP. But if this approach prevails, even the companies that have to invest the most now on the problem like AEP are in good shape for growth.
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Post by redwolf on Sept 28, 2007 14:33:34 GMT -6
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