Lots of interesting news, mostly negative. Holiday spending was down, more than expected. Why? Mostly because people are worried, probably.
Big news was the Swiss unlocked their currency without warning, and the Franc promptly blew away the Euro, leaving currency shorts bloody on the floor (30% loss in a day for some!), and Swiss companies bleeding about $100B of value in one day. Others of course made out like bandits. Of course it's a system shock, and most of the effects will ring out over time, but I do wonder what the Swiss were thinking. This knocks the Euro down a rung (which it didn't need), but also will push Switzerland closer to deflation too. Why do countries seem to be some sort of quandary between courting deflation on one hand or QE to banks on the other? It's a false dichotomy, ignoring the option to invest in infrastructure to better stimulate GDP.
So a stronger Franc makes for a marginally weaker dollar, so oil goes up a bit and everybody long on oil heralds the bottom is here, while those who were talking how much good cheap oil would be for the economy were silent. A few days back it was sort of the other way around. Simply, though, one group of Americans spending less on oil to others making less on oil doesn't help or hurt. The fraction saved from imports helps, but strengthens the dollar, so those trying to export hurt. Overall, long-term, cheaper energy is better, but fast, short, shocks cause all sorts of consternation, especially if there isn't time for gov'ts and central banks to react, and more so if some react poorly when they do. Sometimes an economy here or there hits a tipping point, and gets stuck into a new rut; VZ could go into default, or Britain could hit a deflation cycle, or Germany, or the US could, for that matter. All it takes is a flat economy and then most people saying "Hmm, I think I'll just sit on my money and wait for a bit and see how things sort out", and there you go.
I learned there is now maybe 30Mbbl of storage or so leased (some say up to 50Mbbl). In the past up to 100Mbpd has been parked, and I think there is about 200Mbpd of fleet capacity total. And that's pretty impressive, since that's a mobile quantity twice the complex at Cushing (which represents maybe 70Mbpd free, of the 300Mbbl total US free capacity). US storage is only 1/3 full, so it seems silly to use floating storage, but for Brent crude ships may be cheaper.
Different sites say different things, but there is at least 300Mbbl or so capacity free in the US, and at least a couple hundred more around the world. At a couple of Mbpd, filling up will take the most of the year.
Nat gas is up a little, and at $3+, it is still dirt cheap. For comparison sake, that is relatively worth as much as $23 oil. So, even at the lowest stated floor of $30 or so, oil will STILL be worth more than natural gas. I cannot fathom why the US does not try to consume cheap NG to displace imported oil, instead of worrying about drilling expensive US oil and exporting cheap US NG. Displace oil with NG, display coal with solar and wind, and use a little NG for peaking plants as needed, and we'd have a good start toward and energy policy that made some sense. Spend a few public $$ on the power infrastructure and grid, and instead of wealthy bankers maybe we'd have a stronger blue collar economy and better middle-class as well.
And no, I don't think Austrians and their austerity or Keynesians and their loose money and inflation goals are either one correct. Another false dichotomy (or maybe the same one, rephrased), but for another day's discussion.
Curious what you think of this kind of thinking. While clearly written by and for us Greens, do you think it's plausible our grand kid's energy economy could be largely solar?
ReplyDeletehttp://www.takepart.com/article/2014/09/29/heres-something-look-forward-to-solar-power-could-be-top-source-energy-2050?cmpid=ait-fb
ReplyDeleteAs with any prediction, caveats abound. That article either has a typo, or something doesn't add up, as 16% residential plus 11% concentrated thermal doesn't equal 37%, and 37% being "a top source" leaves 2/3 that isn't solar.
ReplyDeleteBut that said, I think residential thermal is a fairly good solution. Solar panels are cheap (due, as always, to a glut...on top of reduced production cost), and balance-of-system is getting better. The part I like is the natural resilience, with distributed solar. Grid-interactive (grid-tied when possible, but a stand-alone island when needed) hedges all the bets, but at greatest cost.
I'm not a huge fan of Solar City, though, as leasing roof space seems suboptimal compared to having owners actually control their own energy destiny.
Of course, heavy residential solar build-out will stress the grid, both at the local level (distribution loading) and at the primary level (balancing between sectors), and there is the ever-present issue of intermittency. Distributed storage (a la batteries at the home) would help, but again at cost. Grid improvements will help. Long-haul transmission lines will help. But nothing but mass storage will really resolve the problem.
Scotland is going to hit this issue with wind, and soon. As renewables suck away peak-load dollars (southern US summers align with solar peaks, while wind often overlaps cold winter nights) and erode the base, utilities need more dispatchable loads or peaking plants. If you get distributed storage, then peak-shaving makes sense at the individual level, and eventually utilities don't even get enough revenue to support the local grid.
In the end, the public will have to spend money to keep a grid for backup and convenience, and invest in better long-haul connections. To me, all of this is a good long-term investment, as you can spend in slow economic times to boost the economy, and gain resilience in slow times. I may be in the minority, but I view public and private infrastructure is part of our national wealth, it makes far more sense to spend money on 50-year infrastructure than disposable importable junk.
All that said, before adding solar, every house should be insulated better, as that's the best long-term investment, and still cheaper than solar. Then add high-efficiency lighting (LED is my preference), HVAC and appliances. That reduced the energy budget, so less solar is needed.
Unfortunately, solar incentives expire in 2016, and the way oil prices are today, the nascent solar industry will then collapse. So our grandkids may have solar, or fusion, or wind, but our kids won't anytime soon (unless something other than price wins out).
You mention 'dispatchable', a term I've seen elsewhere. Definition, please?
ReplyDeleteYou also mention Scotland, which is a protagonist in this story. Why do you think wave energy is not being supported? No new tech bits to sell wholesale (like wind mills and solar panels)?
http://news.yahoo.com/wave-power-could-supply-half-u-cheap-electricity-233654273.html
From the web, but matching my understanding:
ReplyDelete"Dispatchable energy sources are those sources that can be ramped up or shut down in a relatively short amount of time. This could refer to time intervals of a few seconds up to a couple of hours.
A dispatchable load is basically a power user that you can tell to use less power."
The ultimate dispatchable load is something like pumped hydro, which can shift from load to source relatively quickly. Using stranded wind to generate ammonia is an approach I think has promise as well. The issue, as always, is dealing with upfront costs that have to be carried by some fractional duty cycle of operating time.