A masterful composition again on your part, and is as sobering if not more so than your recent past articles on this website.

I believe its key message is two-fold. The first is current oil price hikes are not temporary as before but sustained, with potentially much different and brutal economic consequences moving forward. The second is the rising price will ultimately affect all energy source prices, which could also drive even more brutal economic consequences.

It's not a great time to be an energy glutton consumer.

There are many business people that recognize what you are saying. Our historically largest car maker General Motors announced earlier this month they are permanently closing one their most productive and efficient assembly plants in North America, the Oshawa Ontario truck assembly plant. It makes fuel guzzling pick-up trucks that consumers are abandoning in droves, all stemming from a "permanent market restructuring", read permanent oil price hikes. They are also planning to market their first Plug-in-Hybrid-Electric-Vehicle shortly, which along with regular gas hybrids are leading a wave to switch autos over to electrical energy. But this very trend will place HUGE additional power demands on the electricity grid over time, which will undoubtedly lead to an emerging crisis in electricity systems that already face HUGE investments needed to replace aging generation and transmission infrastructures in North America.

Yes indeed the rising price of oil will ultimately affect all other energy sources.

Governments have a habit of intentionally downplaying the bad news because they know the public will curtail their spending even more so if they keep hearing economic times are getting worse. It doesn't surprise me that the think tanks you describe in your article have been publishing good news bunk about oil for some time now, since that is exactly what governments and many other intelligent people want to hear.

Keep up the great writing Fred.

Actually I have a better article coming soon, on this speculation vs fundamentals thing. Of course, if you look closely at my work, it turns out to always be approximately the same thing. There really is and has always been only one oil story: the oil producers are in the drivers seat, only they know it, and they are not going to make life easy for the motoring public in North America and Europe by pushing the oil price down - as they said they were going to do at the Jeddah Summit last weekend. Why should they? I certainly don't blame them for making the most of a good situation. After all the OPEC countries once offered to cooperate with the oil importers, but their offer was ignored because our political masters listened to people like Milton Friedman, who convinced them that the price of oil would more likely collapse rather than go up.

And you are right to mention plug-in hybrids! They make a lot of sense if, as you point out, the power is there for them. I am certain that the engineers can figure out the optimal power supply arrangement, but will they be allowed to in e.g. North America A few months ago I was watching CNN, and the ignorant Richard Quest dismissed nuclear. No explanation of course, just a flat statement that it didn't have anything to offer.

Fred

He concludes by ridiculing the “market simplicities” approach of our Prime Minister Stephen Harper, and his finance minister Jim Flaherty who happens to be the parliamentarian member from Oshawa, Ontario.

Note "NAFTA" refers to the North American Free Trade agreement that the US, Canada, and Mexico signed in the late 1980's.

http://www.thestar.com/comment/article/447681

What really irritates me in the current public debate is how much hope is held out for some miracle discovery of a "new energy source." While the possibility is not zero, my reading of current physics knowledge suggests that we have no clue as where or how this new energy source would manifest itself. We don't even know where to look! Of course, it also allows many to overlook the clear, Irrevocable shortcomings of the politically correct energy darlings, wind and solar.

This tendency allows too many to avoid the hard decisions of playing the cards God dealt us in the physical world. That means, of course, learning to love nuclear fission and to make the best of it.

You only need look in your backyard for the new energy source - the sun. When direct and perpendicular to the earth's surface, it shines nearly 1500 Watts of incident thermal power per square meter. If only most or much of this was available as electrical energy.

Nuclear is probably the best bet for the large central generating stations our grids will need for the future. But they are very expensive to build, and this has in part led to a huge wave of investment into researching improving the conversion efficiencies of solar PV and solar thermal electricity generation, both on large and small distributed generation scales.

I admit it’s a pipe dream unless researchers and engineers can get solar conversion efficiencies up and system costs down. But the US has a history of unparalleled ingenuity in high-technologies, so I wouldn’t underestimate what they are capable of given the investment money, and the free market potential to make lots of money in an energy hungry world – read innovation and motivation.

http://www.edn.com/blog/1470000147/post/1980028598.html?nid=3351&rid=1923876187

I will make a cautiously optimistic statement that there may be enough frivolous oil use that demand destruction could be significant enough to drive open the supply-demand gap and give us some lower oil prices. If that happens, we need to work quickly to get other low hanging fruit technologies going (like PHEVs) to drive demand down further. With luck, maybe oil can get down to $80 per barrel, before resuming its inexorable rise.

The government should seize the NiMH patents from Chevron, claiming eminent domain, if they continue to refuse to make large format cells available to consumers. If Chevron thinks they can't sell them profitably, I'm sure there are many factories in China that could. Could this have been one of the reasons that China, Inc. tried to buy Chevron?

I'll go along, enthusiatically, about solar domestic hot water, but little technological improvement is needed or expected in that application. Solar electric is still a strong mismatch between market demand and production capacity. Even if your dreams come true about PV, you'll still need storage.

I'm about half way through a piece for EP on energy storage economics that might clarify some points.

I won't dispute the current economic facts you are stating, but it's the market demand and soaring conventional generation costs that are driving solar R&D and production in all its forms more than ever before. Solar PV silicon production is growing so much it is on track to surpass total worldwide production for electronics semiconductors very soon, the latter of which is a multibillion dollar global industry. And there are conversion efficiency breakthroughs in labs being reported for solar electric using nanotechnology.

Similar efforts are happening in battery R&D.

I admit pouring more R&D into anything doesn't guarantee innovations or revolutionary change, but there are many deep pockets out there who are also dreaming about displacing conventional generation, or at least co-existing with it.

I am of the opinion that there is a lot more in the price of oil due to speculation and dollar hedging than just a few bucks. For this lifeblood commodity, I suggest that the access to the futures market be limited to large scale producers and consumers of the various varieties of crude oil, and the rest of the world (us) be relegated to a) taking our chances with that closed system and b) being responsible for the development of fossil-fuel-eliminating alternatives.

Next, if I were at the helm of the US, I would at least make an attempt to pop the current speculative bubble in oil by literally dumping some of the 1B bbl US strategic reserve back into the market...I "speculate" that the topping off of that reserve, which has been accumulated recently at great expense to ALL of us, will take 500k bbl out of daily demand very soon, and will add as much to the overall production "reserve capacity". Now if we were to dump 50M bbl back into the market, a mere 5% of the reserve, over the course of a few weeks, this would knock the speculating and hedging for a loop, cause short selling of oil futures, and initiate an absolutely necessary "correction" in the price of oil. $80-90 per bbl is tolerable at this point, and with a now palpable threat of additional dumping from our strategic reserve, this should give pause to those who think they might rehedge/respeculate at the bottom of the correction. When prices stabilize below $100 per bbl, we can then "slowly" retop the strategic reserve, at a rate well below 500k bbl/day.

What better use of a "strategic reserve" than to implement a "strategy", eh?

And if this strategy were to fail, what have we, or anyone, lost? Essentially nothing, as the oil will have been sold (on a FIFO accouting basis) at a profit, and we stand to lose a bit (net) on the cost of replacement...

Regards to all, RWVesel

Sorry to be so gloomy but that's the track record and it makes me skeptical of dreamers and marketers.

BTW, what's the annual solar insolation for the UK or Germany? The sun don't shine there like the Mojave Desert, does it?

The difference today is R&D and new discoveries happen at a much more rapid pace than even 30 years ago, all thanks to computers and automation. It does however also need some radically new ideas to achieve breakthroughs that get us off the slow asymptote curves and onto steeper ones. Nanotechnology applied to solar PV is one example that recently jumped the curve, but it has a long way to go yet to become practical and commercial.

Here in Canada too the sun doesn't shine for weeks, sometimes months during the winter, but when it does the other 9 months it's very useable. Only needs a larger collection area for the same incident power than you get in California.

I would argue that the PHEVs may be a breakthrough, perhaps not in technology, but in understanding how to put electric powertrains into practical practice. PHEVs could have been pursued in the 90's, when GM was building the EV1, but they simply didn't understand the benefit of a hybrid fueling strategy that the PHEV affords. Now many automakers do.

The good news of our situation is that there is still quite a bit of inefficiency in the way we do things that can be changed without horribly inconveniencing the consumer.

As everyone can see if they read this link, there are a LOT of things that go into the price of oil, including economic and political factors, and the current price has as much to do with the lead and lag indicators as current events. For instance, when the price of oil bottomed at $11/bbl back in '98, all the oilco executives were in shutdown mode, laying off tens of thousands of highly skilled workers. As the price began to creep back up, those workers were not so inclined to return to such a volatile (and dangerous) profession, and weren't pursuing those "useless" degrees. Even now, the industry rags like World Oil and Oil and Gas Journal are bemoaning the lack of talent, from geologists to roughnecks.

The current insanity from the US political leaders (and wanna be president) about dunning oilcos for not drilling on currently leased lands exacerbates that point. Even if drilling rigs were available (they aren't), there aren't experienced crews to man them, aren't geologists to examine the seismic data (if there were even crews available to RUN the seismic tests) and on and on. Another typical example of pols killing the messenger just because the news is bad. Other countries have available labor, but not available skilled labor, which is why they often steal them from the US and UK. Add in kidnappers from Venezuela to Nigeria, Jihadists in the middle east and the usual dysentery, malaria and other common maladies and collecting those Swedish unemployment checks looks better and better. :)

Bob, thanks for agreeing with me about PHEV's overloading an already shaky grid. Personally I think the US (and parts of Canada) would do well to emulate the pictures we all used to see of thousands of cyclists on the road in China. Those bicycles have now been replaced by cars, and the pollution and gridlock the obvious result. Perhaps if we were to switch to bikes, we could destroy some demand AND get rid of those excess pounds... :)

And, as Isaac Newton said after losing a bundle in the South Seas swindle: 'I can calculate the motion of heavenly bodies, but not the madness of crowds '- or something like that.

Well, I can understand everything in the economics books, but I am absolutely unable to understand how the U.S. - of all countries - cannot produce the people needed to obtain the oil and to build the nuclear plants that are needed - in fact more than that. Haven't the decision makers looked at the production figures for the last year of the second world war.

Coming from the electronics industry that has historically been quite separate from the energy business, I have learned a lot from reading and posting comments on this website, especially from Len Gould, Fred Banks, Todd McKissick, Jim Beyer, and yourself, in just a few short months.

In my industry among THE biggest trends in microelectronics since the new millennium started has been to lower-power silicon chips of all kinds, and more energy-efficient circuit design. Improved power efficiency is intimately required in many new product R&D because the proliferation of electronics is partly to blame for the continuous demand growth in our electricity system.

Fred’s oil article here is not only a wake-up call to the oil and energy industries, it will also profoundly increasingly affect mine over time because electronics will be key to enabling intelligent management of alternative energy sources and the electricity system.

If I were looking for employment with a bright future, or if I were an investor with deep pockets (too bad I'm not), I would put my money into companies that are developing CONSUMER products to address these things. Examples are Poulsen Hybrid in Connecticut offering that new retrofit kit for ANY car that converts it to a PHEV, or those developing concentrated solar thermal generation and solar PV systems, or more efficient heat pump technologies for residential applications especially for cold climates that we have up here in Canada.

http://www.thestar.com/article/449811

In it Canadian Imperial Bank of Commerce (CIBC) economist Jeff Rubin predicts $US 7.00 a gallon for gasoline in the summer of 2010, almost double today's $4.00 price. And, more importatly...

"the next four years we're likely to see "the greatest mass exodus of vehicles off America's highways in history," with some 10 million fewer cars on the road by 2012."

That's a lot of used gas-guzzler vehicles to get rid of in junkyards, or alternatively in backyards when nobody will buy them.

Intelligent consumers, yes there are some, will likely hold off buying new vehicles at least until they realize and accept the increased prices of oil and gasoline are on average permanent. And this will only exacerbate the current pain in the auto industry.

If I were a CEO of a major American, Japanese, Korean, or European auto producer, I would be losing sleep over planning future car designs to re-invent my product line-up. Maybe a career in automotive (re)design engineering will be soon become a career in high demand too.

Another long-past futuristic dream is telecommuting, i.e. working from home, becoming widespread for office professionals. I can say from personal experience I would save thousands of dollars a year in auto expenses and save weeks of traveling time driving for work if I was enabled to practice it much more. There just might be a resurgence in this old idea, which the providers in the electronics industry for high-bandwidth internet technology will be drooling over I'm sure.

Heavens, I might even consider manufacturing or selling bicycles. Who knows, perhaps the Chinese love affair with them was a future omen of things to come.

And lets face the facts of life. The TV audiences have put some of the dumbest people in the world at the head of their governments. Here I'm thinking about my country (the U.S. this time) and its foreign minister, who yesterday presented what is no less than a slap in the face to the North Korean government. Almost makes me want to use some street language, although what was once street language is prime-time servings these days.

Fred

In regards to the people question, I think slavery was the orginal energy policy. It had its day and is history to the living, but then it was replaced by eugenics, which was supposed finally outlawed in the US in 1979, and recevied a small reversal by the US Supreme Court around Jun. 19,2008; but its too little and too late for the US. The SALT, non-profileration agreements and education reforms in the late 80's and early 90's encapsulated many ignorances, and combine that with the ever present Peter-principle, and here we are $142 a barrell oil. My deepest sympathy for pHd's, after all, they're first duty is be teachers; it must be intolerable; taxes, ill concevied trade agreements, and criminalized sciences are too much for any to bear in the long run.

This brings us back to Rickover's orginal spot-on observations, and GDP and GNP matters, especially for populations that grow.

Here's how, I think US can start to bail out : First, drop the income tax up to the limits for the current social security tax. Then, suspend fuel surcharges. After-all, if labor input cost can managed, so can energy. I think that will surface enough changes in the energy mix to change the trajectory towards optimally. Might take 50 years. The kicker of all this, is everything about this has, including global warming (thermal pollution), air pollution plant choice (etc), since the 1960s. So really, I tend think there's really been a 50 year embargo in place, and the instutional barriers it has spawned are in the way. Did anyone see about the news about young man who build a fissioning nuclear reactor in backyard in Dallas a few weeks ago and got arrested ? The message is 'experiment = jail", Wait until frensel lenses goes main street, it will get hot.

In regards to China, they really don't have a history of paying for technologies that are highly desired, do they ? Can they really afford too, especially for something which is nothing more than just a small relief valve, plus the internet has wiped out much of value of patents. Why should they pay for what can download.

I expect a correction in the getting a patent in the future, and suggest to all to hold you're fire on the good stuff until they're begging This will be indicated when the surviving specialized 'news' shows no longer ridicule, and send out 'S-O-S' everyday. Prizes, everyone knows about cracker-jacks and honey-pots. Go to the forest, or a cave in Norway, trust no one over 20, give everything you know to your children, correction grandchildren ).

Another good article, I expect 150 by July 4th.

The kind of futures market that you want to see would lack liquidity, and this is exactly what would cause this kind of arrangement to fail. Of course you could argue that a swaps market is a futures market without speculators, and perhaps it would suffice to allow most producers and consumers to hedge price risk, but 'masters of the universe' in New York and London say that a futures market - with a lot of speculation to give it liquidity - is the best arrangement. For what it is worth, I think that the best arrangement is the presence of futures, options and swaps markets.

But, as I found out when I taught in France, some people are offended by futures and options markets, however I cant picture myself becoming one of them. I accept the argument that if it is impossible or difficult to hedge risk, investment will be reduced. And the losers in all this - well, it's the speculators who made the wrong bet. Tough ___ for them, as we used to say in Uncle Sam's army.

Fred

Actually greed can be a good thing, because it de-randomizes behavior of the kind economists like to monitor. Fred can easily predict producer nations' behavior because he understands the greedy basis, otherwise known as self-interest. Because of TV and other medium (including friends, family and rumor), kids these days believe they're going to make scads of money as investment bankers because they can read the WSJ and see what those guys are pulling down a year. Meantime, that nerd in class who became an EE or worse, a petroleum engineer was virtually unemployed for 5 yrs, or had to take jobs in godforsaken lands because that was all that was available. So naturally the kids opt for the NY banker lifestyle and aren't available to engineer us out of this predicament.

We ARE in a predicament, moreso than the public realizes and it is going to take engineers to get us out of it, pure and simple. Any of you know any engineers? ;)

I agree with Fred that oil producers will not increase production like the EIA dreams they will, since that would involve a huge capital investment that would only result in a reduction of their eventual income. They've realized that they only have a finite amount of oil, and that they will eventually sell it all. They cannot increase total eventual (ultimate) sales volume. Thus, the only issue is what price that fixed block of oil will sell for.

Increasing production rates will reduce the price, and simply make the oil run out sooner. In fact, a higher production rate results in lower ultimate recovery. One could actually curtail production, but that may drive prices up so much that world depression (and resource wars?) would result, and may cause alternatives to be developed before much of the oil is sold.

So the question is, what is the ideal rate of production, from the producers point of view? My arguments above suggest that it may be something close to keeping the current rate. There are other reasons to just keep the current rate. I may be wrong, but my thinking is that whereas it takes a large capital infrastructure investment to increase the production rate, a much lower level of investment is required to simply maintain the current rate. Reducing the production rate does not save or avoid much equipment investment, as the cost of keeping the existing infrastructure running (i.e., maintencence, etc..) is not very high. Some investment is still required to maintain production rates (such as drilling new wells to make up for depletion of others), but much of the infrastructure (such as the processing, handling and shipping infrastructure) scales with the production rate, and does not have to be built (only maintained) as long as the production rate does not rise.

Based on the above, there will be a strong tendency for them to just stand pat with current production levels. They won't increase them much (to meet our needs), because that would cost them a lot and only reduce their profits. On the other hand, they probably won't reduce production levels either, as there is little economic savings in doing so. Thus, I believe that the most likely scenario is that the oil producers will settle on this "compromise" policy, of maintaining current levels. Thus, there is a good chance that CERA is right, as far as the next 10-15 years are concerned.

Comments?

But yes, for what it's worth, an undulating plateau is possible, But it ain't worth much except a lot of trouble for those of us on the buy side of the market. What difference does it make if oil goes to X dollars/barrel because of an undulating plateau or a distinct peak? And let's get the bottom line straight here: those people are not going to raise production the way they said they would at Jeddah or someplace else because they either cant or dont want to or both, and the same is true of the Russians. What do they have to win?

According to somebody I don't like - Martin Wolf of the Financial Times - the financial transfer from oil consumers to oil producers is more than 2 trillion dollars per year at present oil prices. But that's not all of it, is it. What about the decline in value of our shares and the unemployment that is due or going to be due to higher energy prices. Not long ago I made the absurd observation somewhere that the price of natural gas would probably stabilize around seven dollars per million BTU. That price at present is around $12/MBtu. When the 'wealth effect' of higher energy prices is taken in consideration, then Jeff's statement that we are in a "predicament" can be multiplied by something.

Fred

I'm an electrical (design) engineer if you're looking for one, but I can tell you from personal experience it's very tough trying to get us out of our energy predicaments.

There are many egineers around with bright ideas and technology already developed in many cases for many aspects of the energy world including in mine the electronics industry. The real problem in getting any of these things commercialized is raising the necessary investment to do it. Our energy industries are so rife in political involvement that tend to be dominated by large existing corporations and regulatory bodies that few in the private sector are willimg to take the huge risks of sinking large amounts of capital into new ventures. Here in Canada and probably in the US too the majority of new ventures and technology investments are only forging ahead only with public funding or incentives from governments. The exceptions are those ventures whose product or service can be marketed DIRECTLY TO CONSUMERS because at least consumers are far easier to predict and represent true free markets.

Bob Amorosi, M.Eng., Resident of Ontario Canada

These requirements tend to cater more to existing large companies and wealthy individuals with deep pockets, and makes it more difficult for start-up ventures to get the help unless someone or some company with deep pockets is backing it.

http://www.pittsburghlive.com/x/pittsburghtrib/business/s_575073.html

In other words, an upper limit in production causes volitility in world economic activity as it hunts to find an equilibrium.

This is not a pretty picture! Of course, it will hurt developing countries like China and India more but everyone suffers.

Fred

China wants 100 Westinghouse reactors Pittsburgh Tribune-Review, PA - Jun 27, 2008

Smart move. That's about 170,000 MW with a life cycle of probably 75 years of rock solid gold-plated reliability. This investment would not be made if 'oil was going down'. Personally, I still think they're in start-up mode, and has decades before an S-curve plateau. Plenty of transmission could be build into N. Korea. Now, if game theory has predictive value, then the current supply chain will be sold out. Those lacking leadership, need to start negioating emmigration treaties.

Here are the facts, from the DOE: http://www.fossil.energy.gov/programs/reserves/spr/spr-facts.html

Monthly SPR updates: http://www.spr.doe.gov/dir/dir.html

The expanded reserve is indeed only about 3/4 full. We allowed a drawdown of 11M barrels due to hurricane Katrina. I offer to all that gas at $4 per gallon is going to hurt us a lot more than Katrina did, just spread over the entire population more or less equally, and in a long protracted fashion ... I propose a 50M bbl drawdown, over a period of 21 days, or about 2.4M bbl/day, just over half of the delivery capability. This can start 13 days after a presidential order, so there would be almost two weeks for the marketplace to respond to the "imminent threat" of the 50M bbl "dump". It may not even be necessary to execute the entire dump, if the intended bubble-bursting effect is acheived...

Think of this as a "free market" counterforce to speculative excess, much the same way as the Federal Reserve uses interest rates and money supply to throttle the economic activity. This organization was created to introduce a sense of order and stability into the US financial system, which was fairly chaotic prior to then. Supply and Demand are free market concepts, and no one should say "unfair" if a representative government does what it can to curb excesses through supply-side management....

Dr. Banks - I agree that, in general, the more liquidity there is in a particular market, the "more functional" it is. However, I am not "taking the word of" those whose vested interest is in providing (and charging for) all those instruments and commissions on every transaction ...

It should be obvious to everyone that the size of the forces at work in global markets, without any regulation, can literally crush entire populations with expenses which change to rapidly to react to - witness the what the prices of grain have done to people and industries dependent upon those grains as food or input...

I suggest some further thinking on "risk v. reward" of such systems, in such cases where a particular commodity is lifeblood for most of the civilized world. I hope to god that no financial wizard comes up with a futures trading scheme for Gigawatt hours of electricity, for example. While we could do with short supplies of almost any other particular commodity, due to suitable alternatives, I suggest that energy fall under some more strict regulation so as to prevent a relatively small handful of completely disinterested opportunists from profitting on the misery of the masses.

There will be enough misery to go around, as it is, even without the speculative spikes tossed into the picture...

Regards, RWV

Put another way, I don't buy the speculation/bubble approach. The bottome line is physical demand outrunning supply - although it is likely that there is some small-scale destructive speculation somewhere in or near the picture, and it could get worse.

Fred.

When do we all realize that the Emporer has no clothes on ?

Turner

You want a good Energy / Fuel economincs argument for solutions to the energy crisis?

Energy Victory: Winning the War on Terror by Breaking Free of Oil, 2007 book by Robert Zubrin.

I listened to him lecture the subject at Colorado School of Mines, innovative idea.

The War on Terror spin he was trying to make when writing the book is basically irrelevant when you look at today's oil economics.

It's a simple solution - Automotive internal combustion engines may be converted to run of any mixture of gasoline, methanol, and ethanol for a few hundred dollars price difference in a new car. Federally mandate manufactured automobiles to be able to burn ethanol and methanol in addition to gasoline - and the oil monoply would have to compete with other fuels that would be burnable in all new cars.

Sir, you wrote about the limits of supply and demand. Well this is a simple solution. Create a flexible demand that can accept supply from different fuel sources. Supply of ethanol + methanol + gasoline will increase avavilable fuel supply to meet increasing demand, and let market forrces compete to noramlize fuel prices.

This is not switching to alchohol fuel, merely creating the option to use alchol fuels, and let the market decide.

That is an example of a potential innovative ecnomic solution that would be implmented by a proactive government. If you can find the flaws, by all means pick it apart or find a better way to increase supply to meet increasing demand for fuel. But the test case was Brazil, they have their own precursor version of an alchohol fuel economy. The affordable technology exists, the economics are simple. Can anybody argue against an increase in fuel supply? It just needs a legilation to create the demand to be filled.

So does anyone know a way to get the media and politians pursuing solutions? Or are we going to do the lazy american thing and look for scapegoats ?

-T

http://www.theoildrum.com/node/4138/359968

Let's all hope for peaceful settlement of these unfortunate matters.

cheers http://www.prosefights.org/thecanadian/thecanadian.htm#kallisteback

As for myself, I am perfectly willing to buy a plug in hybrid, but will not ride public transport. Gas is no where near expensive enough ($4.69 for premium today) to offset the opportunity cost of the extra hour + per day it would take to use public transit. Perhaps a 45 mpg diesel would suffice for a while. Expect that to be a common response.

Barring discovery of more oil or gas than is generally expected, it seems inevitable that economies that delay adaption of nuclear power are going to fall behind. If the Chinese move aggressively while Americans dither our grand children may ask why we were so stupid. And if some nations do move aggressively to nuclear power then some of its downsides, such as nuclear proliferation, become largely sunk to whether the US (and Europe) embrace nuclear.

What are our political masters supposed to do about it. Well, I've been writing about and publishing on this subject for yea years, and the only remedy that I have come up with is to put more emphasis on nuclear, because this is probably the most flexible energy or quasi-energy resource. Let me put this another way: the regular commentators in this forum - excluding my good self - probably have the answer to that dilemma, and if they dont, maybe they know someone who does.

If nothing less, this last few years (months?) has provided a textbook case of price elasticity of demand. Ted, your call for flexibly fueled vehicles makes sense in a "bursty" supply case in which different fuels are in vogue for periods of time much less than a car's lifetime. But thus far nobody seems to have an alternate fuel that comes in sufficient quantities and without side effects such as impacting the food supply. Even now after a few years of production, ethanol represents no more than a few percent of our domestic liquid fuel supply. If there's a black swan here, it is that most of the world seems to have forgotten that fossil fuels are finite and not renewable.

Engineers can increase our infrastructure efficiency, sure, and that may be the best source of medium-term "supply". But engineers cannot make energy where there is none. We need alchemists, perhaps. The sun is our best source; we'd better get good at using it.

Chris

Chris,

About Solar power. I burn a few tons of coal and a few barrels of oil to get a photo voltaic cell or steam solar plant that produces a fraction of the net energy used to manufacture the solar power gadget in it's lifetime before it becomes weathered and broken. Net energy is we burn several times more fossil fuels creating the solar power gadgets than they ever give back to us. Net energy it's currently a lose/lose situation.

Solar is an abundant supply that we cannot effectively harness. But I'm and engineer, I use solutions that work today, hoping for something better tomorrow.

About Alcohol fuels:

Demand of a commodity dictates the supply.

Most of the existing world wide demand for ethanol is for food grade ethanol. Only a few regional areas (like Brazil) use it as fuel. Keep in mind FUEL grade ethanol can be made made from non food sources, e.i. weeds, grasses, algae, etc; need not automatically effect the food supply or price. In fact, if you study your agricultural economics closely, you'll see that the price of food is dictated by transport and fuel prices, much more than the price of corn. Literally a $3 box of corn flakes represents a few cents of corn, some labor, several more cents of electricity for processing, and over a dollar of gasoline to transport it to the store.

That is why I suggest - read the book. The economics are explained very well. If you create a potential demand for alcohol fuels, the technology exists to create a supply. And the existing oil infrastructure works for transport and distribution. The Gas station can pump alcohol same as unleaded.

But nobody will sink billions into developing a large scale alcohol fuel refinery without an EXISTING demand.

I'll say again, read the book, and some others on the subject. We don't use all our arable land for agriculture, because lower yield land is not profitable for food crops that sell cheap. But farmers may profit from currently underutilized lower yield arable land with biomass crops that will sell for a profit as a renewable energy source.

And best of all, it's a regional supply of biomass. Anything with sugar or grain in it can be made into an alcohol fuel. And with modern agriculture, there is plenty of available land. You can have local renewable fuel sources and local scale fuel refining. No need to buy from OPEC.

And again, look at the information sources. Zubrin's numbers based on government and university studies showed a domestic US untapped economically viable agricultural capacity to provide adequate alcohol fuel feedstock to permanently supplant more than half of our current domestic gasoline consumption. Because Oil is more more expensive than food, and fuel crops will be much more profitable. The current limit is the manpower for working the land, not the amount of land. Food shortages are from changing the destination of existing supply. This is about increasing agricultural supply by using currently unused land because there is no existing profitable demand for use.

More candidly - look at the developing world - more land than they know what to do with, and cannot afford oil. With readily available vehicles that would run off alcohol fuels, they could grow their own fuel stocks, develop small, local alcohol fuel refineries with investment capital, and establish regional fuel independence in less than a generation. That in turn effects global supply and demand for combustion fuels as a whole.

No alchemy involved. Existing technology requiring different circumstances for free market economics to drive development of new supply of alternative fuels.

I guarantee, if all cars were capable of burning methanol or ethanol; there can be profit to make at selling raw alcohol at $4 per gallon. It sells for about a tenth that at Walmart as rubbing alcohol now. All they need is a market demand for it.

But I'll digress. Read the book (which I don't have handy to quote), with a few hundred pages of referenced scientific and economic explanation. Then judge. If you'd rather be a lemming and believe a couple pop culture media reports that say bio diesel and ethanol are unreasonably effecting world food prices - without checking the source or researching the economics yourself. That's your choice. Don't believe the media blindly, don't believe me - find out for yourself.

Thanks,

-T

First point: If you really are an engineer, you might open a reference work to correct that first statement. Or try to formulate the calculation yourself ... Nooooo, forget that. As indicated in the second statement, as an engineer you only do what you know has already long been done by others.

No creativity allowed.

http://www.ases.org/divisions/electric/newsletters/2006-04.html#roi "The primary reference for this work is an article entitled “Solar thermal electricity: an environmentally benign and viable alternative”, by Vant-Hull in Perspectives in Energy, 1992-3, vol. 2, pp157-166 published by Pion Press, Great Britain."

"My 1990 analysis of a central receiver system showed an EROI of 27 for energy in to electricity out is more appropriate. If put on the same basis as PV or Wind (run-of-the-sun (or wind)), the number is 44. If recycling is assumed the EROI is 45 or 74, respectively. "

There isn't enough biomass to make enough of a difference to do it all with biofuels. I think he looks into coal->methanol to supplant that. But that means more carbon emissions.

Methanol is not a very popular fuel. The automakers (to date) have stayed away from it because it's so poisonous. That may change in the future.

Zubrin made no effort to add PHEVs to his solution, which at the very least (simple HEVs) can do something to increase fuel efficiency in automobiles.

Methanol is so bulky that simple conversions may not suffice as additional tankage is needed to provide desired range.

I don't know much about the oil business Fred - splitting atoms is what I do - but what you say makes absolute sense to me. Any one who considers that oil producing countries whether Middle Eastern, Nigeria, Venezuala are going to produce lots more oil to keep the price down for Western countries is out of their mind. They are going to keep it in the ground and sell less of it for the same money...what would encourage them to do anything other than that defies logic. But as you say the IEA and the like are not logical...they are political and will say what is politically correct...not what is right.

IF PHEV's become economical and their use is widespread the effect on the grid system will not be as great as some imagine. Since the majority will be recharged overnight when the grid is lightly loaded it will have the effect of load flattening which is a good thing. It also of course will encourage more base load plants and (the reason why I like them) is that will make the economics of nuclear power even more attractive than they already are. Basically PHEV's increase the base load requirement and base load is best filled by nuclear.

The discussion on solar power is (of course) missing the one fact I have often repeated that the Sun does not shine at night. So you an build all the capacity you want - its output at night will be zero. I know this for a fact as it is quite dark here in Ontario as I write this and I think it is because the Sun is not on this side of the Earth. Therefore to make solar work one MUST have storage and the cost of that storage MUST be added to the total cost of solar and THAT is why it's economics put it out of practical consideration for anything other than running a few low wattage gadgets.

I have not seen any calculations with storage included and I suspect that cost will be sky high. Can anyone here send me that data so I can take a look at it. Exactly how one proposes to charge PHEV's overnight (Sun not shining remember = zero kW) with solar panels and no storage capacity defies logic. It would make much MORE sense to place the solar panels right into the car body....which would make ones car rather pricey. There may be technological advances but I see nothing on the horizon for the large scale storage of electricity that is needed. If it were available nuclear plants would already be using it.

I remember the promises of low cost solar in the 1970's and that utopia never arrived so I doubt if the current bevvy of promises will make much of a difference either. I wouldn't bet the farm on it.

And methanol...I guess if you don't drink the stuff its fine...and I don't drink gasoline so should be OK.

I plan on buying a Chevvy Volt when it comes out so I can use nuclear power to charge it up and not use gas. Kinda like that idea.

Malcolm

You are correct. Energy cannot be created or destroyed just converted from one form to another. However massive amounts of energy are locked up in the nucleii of atoms and every day nuclear plants liberate this vast and unlimited energy supply. The alchemists are alive and well creating energy from useless lumps of rock - they are just called nuclear engineers.

Two hundred nuclear plants across North America and all energy concerns disappear. China understands, India understands....North America slowly getting there but too late I think to salvage our present standard of living.

As for ethanol - anyone with a heartbeat could have figured out what was going to happen....and it did. A food crop is now an energy crop. Enjoy your box of cornflakes it may soon be your last.

Malc

I would disagree with you on the proliferation aspects of nuclear power. You do not need a nuclear power plant to make atomic weapons. Just an enrichment plant. In fact nuclear fuel from a commercial nuclear electricity generating plant is the worst material for bomb making. So nuclear power plants do not cause the proliferation of nuclear weapons. It is often used by anti nuclear activists but they are totally wrong (as they are about anything nuclear) - but it makes for great fearmongering...which they are very good at.

Malcolm

The UK Government decided to build gas plants not nuclear - not much good when you have no gas left...and when the price of THAT commodity starts to skyrocket maybe just maybe you will understand that nuclear power is the ONLY option left unless you want electricity rationing and prices in the dollars per kWH. Sooner or later the penny will drop.

Malcolm

Whatever the economics of Len Gould and Co the fact is that to make 1 MW of 24 hour electricity at the equator (12 hours sunlight + 12 hours darkness) with a solar panel requires 2 MW of installed capacity running at maximum capacity for the 12 hours of sunlight. I MW goes to supply the 1 MW demand and 1 MW goes to the storage device for night time use when the whole output of the panel (all 2 MW) is zero.....and a storage device of exactly 1MW to supply the 1MW of demand at night.

So one must build TWICE the capacity PLUS a storage device for solar power to be equivalent to other sources of electricity such as nuclear power. A nuclear plant supplying 1MW requires just 1MW of installed capacity and no storage device and is independent of cloud cover or other phenomena that detract from its rated capacity and over which we humans have no control.

I think that makes solar power uneconomic except for perhaps peak lopping during the day. Any claims that it could ever replace nuclear or coal on a large scale are bogus nonsense.

Malcolm

a) I have never opposed nuclear power, in fact am a huge booster.

b) solar generation makes a perfect daytime peaking source to compliment nuclear baseload. We can deploy solar thermal economically now at max capability for a long time before overnite storage becomes an issue. Overnote storage is available, proven and economical.

c) I support research into Optical Rectenna PV which has the lab-proven capability (with a LOT more R&D) to be manufactured cheaply with common materials. I do NOT support spending vast amounts to deploy present common PV systems.

d) I support immediate large-scale deployment of solar thermal, esp. if CHP can be a part of the installations. This is an economical competitor to natural gas peakers NOW, is predictable based on simple cloud-cover forecasts, and should be deployed NOW.

e) several others.

As a nuclear engineer, you of all people should be a huge fan of solar generation a the only logically useful renewable resource to compliment nuclear. The field is large enough for both to play a huge part. Or do you need to wait for France to show you the way on that as well?

But I wouldn't ignore solar as a medium-term solution.

Malcolm, I too agree nuclear is a part of the solution, especially medium-term. But I'm not sure 200 reactors is enough to replace oil. I guess my concern is that PHEV charging alone would swamp our base load supply. Bear with me through a few figures below.

First some assumptions: All gas/diesel/nuclear figures are from 2007 EIA data. I assume the same number of vehicle miles driven and that PHEVs are essentially as efficient as existing ICE in terms of raw energy required per mile driven. Most likely the PHEVs will be more efficient but we can muddle through that later.

That said, U.S. 2007 product delivered (and generally consumed) was 9290 k barrels/day gasoline and 4220 kbd off diesel. Let's just work the gasoline part. If gas provides 125K BTU/gallon and 1KWH=3413 BTU we get 36.6 kWh/gallon or 1538 kWh/barrel of gasoline. So 2007 gasoline usage is equivalent to about 14,290 GWH/day or (dividing by 24) a rate of about 595 GW continuously. That's just the gasoline.

In 2007 the US nuclear industry produced 806 TWH worth of electricity out of 879 TWH possible (100.33 GWh nameplate x 365 x 24) or about 92% utilitization, pretty good.

So to replace gasoline with nuclear, assuming perfect batteries, no transmission line losses, etc. I believe we would need 648 GW capacity to supply 595 GW at 92% utilitization. or about 650 reactors. To replace diesel fuel adds another 330 reactors or about 1000 total.

I've repeated these calculations with solar PV and natural gas as a replacement for gasoline and diesel. Each time the existing capacity is swamped by the energy requirements for car/truck transportation alone. Maybe its time to review the assumptions, but the only one I've arrived at is that our way of life is going to have to change dramatically, starting soon.

Chris

Contrast this with all the oil and NG input to fertilizers, weed killers, and diesel fuel needed to run our farms. Perhaps its time for a PHEV combine.....

I think the EROEI is pretty favorable for batteries too, especially if the materials can be recycled when the batteries wear out. Since liquid fuel is getting scarce, 8-10 kw-hr of batteries in a PHEV displace 1 gallon of fuel every time they are used. Assuming 2000 charges, that's 2000 gallons not used. So, the net EROOI is huge in this case. We should be building these things yesterday....

I agree - semi manufacturing uses electricity to heat plasmas and other gaseous environments for processing. I suspect the initial "mining" of silicon would use some oil. We can make PV arrays using nuclear, no question.

And to you and Len, conventional silicon PV isn't the only solution. Solar thermal, CSP, and other PV technologies all play a part in this. And nuclear. We need to get going!

Chris

Malcolm is a perfect example of someone stuck on one solution and refusing to accept the alternatives and their potential. This is the same attitude that's killing off the physical accomplishment in the newer alternatives. I don't know if the Malcolm's of the world are influencing the politicians or the reverse, but it's a big problem that's affecting all of society.

Chris has laid out some of the realities that show nuclear cannot possibly be the only solution. Another reality is that it's simply not possible to put 1000 nuke plants all over the countryside (helping just the US). The NIMBY may be irrational but it is real. The logistics of supplying everything needed for this gigantic new industry are flat out impossible. The manpower needed at the skill level and security level is not and will not be available. The massive transmission grid is also not feasable. Malcolm should know this, but chooses to ignore it.

As Len has clearly laid out, nuclear is a perfect match for solar thermal. Together, the capacity is there and they do match each other's shortcomings. As I've pointed out before, incoming solar energy can be viewed as fuel delivery, allowing it to be used for generation at a later time. (Is nuclear's capacity 0.13% just because it's only receiving fuel for 12 hours per year? Rediculous.) One confusion comes from the muddy waters between solar thermal and PV. PV needs instant storage of electricity to shift delivery times away from generation times by even a minute. This storage is more problematic than other forms. Nuclear storage costs more than coal or NG, but is still cheaper. Solar thermal storage falls somewhere inbetween those three. This is why PV and CSP need to be considered as seperate technologies. While PV is making impressive progress on both the cells and the battery technologies, it will always be behind CSP because of the 'fuel' storage issue and the CHP benefits it lacks.

Down the road, the biggest player in our future energy sources may be to use CSP in a distributed manner where the 60%-70% losses can be used at up to 90% utilization (CHP). This tripples the 30% capacity (calculated from raw energy) of these systems while directly reducing transmission capacity and new land use by the same amount. When considering the dual use of many of its materials, it can push the EROEI beyond the 200 mark. That trippling of efficiency (unrivaled from any other source) plus transmission reduction will become very significant when everything is tied to grid health in the same way as it is to oil now.

I firmly believe that most popular commuting types of transportation today will go the way of the dinosaurs within a decade or two. Public transportation is beginning to offer substitutes that give us those freedoms that we want (see PRT, Personal Maglevs, tube highways and even high speed rails), but they shift oil use to the electrical side. In the meantime, we have BEVs, PHEVs and HEVs for the transition and longer term specific needs. All biofuels can and should do long-term is address more of those specific needs. Either way, the grid is where our energy future is at. This seems indisputable. I see this as why all energy discussions migrate to grid supply and smart grid technologies to use it's full capacity.

As Fred has informed us, those with power will disperse it for the most profitable gain. It's time to give the masses that power.

And (I believe) I saw that other article and the comments, they wern't near as critical as you make out and were obviously the unfair (lack of) thoughts of some thwarted smalltime investors who just recently figured out how to sell oil short. Keep up the excellent work.

I am not a particular fan of any form of generation...just the ones that work at a price people can afford. Item b on your list indicates to me that price appears of no concern. Deploying any generating system with a capacity factor of just 50% at the very best and likely very much less than that is a poor use of money and resources. What it means is that for every installed megawatt you must have some other form of generation in place. With solar you have very little choice over its operation. Sure it can provide some load clipping in the summertime but not very much for the investment you make.

Ontario is constructing a 40 MW plant in Southwestern Ontario. Government subsidised to pay 42c/kWh when it operates. The efforts are laudible but paying 10 times the price from a solar PV array when nuclear provides it at 4c per kWh seems an uneconomic proposition to me. Nuclear is available 24 hours a day Solar is only available during the day. So it really isn't that perfect when one has to pay 10 times the price for it. I guess it depends on ones definition of perfect. But as you said you do not support these types of systems...unfortunately our politicians have a hard time telling the difference. Not their fault really. I think large scale systems made of common materials are a long way off...but you are clearly the expert on that not me. All I know is the ones I can buy now at the hardware store are horrendously expensive per kilowatt.

CHP systems are OK but who is going to spend the money to build that infrastructure into every building in the country. Seems like a very expensive proposition to me. I would favour ground source heat pumps operated by electrically driven compressors. One does not hear much about these systems on this forum.

France produces almost all of its electricity from two sources and I would be delighted if North America followed the lead of France. Nuclear power (74%) and hydro dams (14%). Newer generations of reactors can be designed to load follow which eliminates the need for peaking sources but makes the nuclear electricity a little more expensive since it lowers capacity factors.

So my view is that the correct blend of reactor types in the current grid system can meet all the electricity needs of society for hundreds of years into the future. To me it clearly makes much more sense to build a system that is known to work with technology we already have rather than deploy a whole new infrastructure of wind or solar or whatever and find that we still need nuclear as well.

Todd accuses me of being stuck on one solution....perhaps....my solution works but I am very unsure that the alternatives proposed here will.

By way of example - the flaws in the ethanol solution were pointed out on this site many times. It is being implemented and as every one with half a brain predicted food prices have shot up as a direct consequence of that flawed solution. And the price of gas hasn't gone down as a result has it?

I like the French solution - 56 large scale plants producing 74% of the required power with no emissions. Sure they could throw on a few solar panels to lop off the peaks - they can afford it theya could care less about the price of coal or oil or natural gas for their electrical generation.

Malcolm

As a nuclear engineer, you of all people should be a huge fan of solar generation a the only logically useful renewable resource to compliment nuclear. The field is large enough for both to play a huge part. Or do you need to wait for France to show you the way on that as well?

Fred

Given the only published reports on new nuclear plant proposals put the minimum cost as high as $14B/gw (FPL - last week), can someone cite the actual costs & formula for figuring the capital cost (in $/kWh) for that plant if amitorized over 40 years and a more likely 20/30 years?

Also informative would be how many souls are employed per plant and at what average pay. Given the current shortage of those engineers, please include the salary inflation that's inevitable.

Then to find that viability of nuclear as the single major supply for the future grid which will include most transportation, we need to know how many plants and transmission lines that will take?

We so often hear numbers thrown out, like $0.04/kWh total or $0.012/kWh for capital costs only, but let's see how the hard numbers really break down for the hundreds of new plants proposed here. My guess is some assumptions are about as old as our operating plants.

"I assume the same number of vehicle miles driven and that PHEVs are essentially as efficient as existing ICE in terms of raw energy required per mile driven. Most likely the PHEVs will be more efficient but we can muddle through that later."

This assumption is not a minor point (that can be discussed later). It is a major error in the analysis that totally changes the conclusion. This is especially true given that he compared gasoline's thermal energy content with the kW-hr output from reactors, as opposed to the thermal energy of the (uranium) fuel.

The overall well-to-wheel efficiency of electric cars is about double that of ICE cars, even after accounting for the (33%-50%) thermal efficiency of electricity generation. If you compare gasoline thermal energy to electric kW-hrs directly, the difference is almost a factor of four. ICE engines are ~20-25% efficient (at converting gasoline thermal energy to work). Electric cars are over 80% efficient, even after accounting for transmission, battery and electric motor losses. Thus, there is a factor of 3 to 4 difference.

So, if you take Chris' figure of 648 GW and divide by, say, 3.5, you get a total reactor rated power level of ~185 GW, which can be supplied by ~150 new reactors with an average power rating of ~1.2-1.25 GW. Even if you add trucking (diesel), the number is less than 250.

Most or all of these new reactors could be built at existing sites (that already have operating reactors). Most sites in the US have been analyzed and qualified to accommodate 2 or more times as many reactors as they actually have.

As for NIMBY, polls consistently show that the support for new reactors is very high (~75% or more) in the local communities around existing plants. These folks are used to the plants; they know that they do not have any significant deleterious effects (e.g., pollution), and they are very familiar with their impact on local employment and the local tax base. In fact, many of these towns are now engaging in bidding wars; offering financial (tax) incentives to host new plants.

There was a recent study by Pacific Northwest Lab which showed that a significant penetration of PHEVs could be accommodated by our existing power infrastructure, w/o having to build new power plants or transmission lines, as long as they are recharged at night. Of course, we would wind up running gas/oil peaker plants as baseload plants, which would result in our wanting to replace them with renewable or baseload (nuclear/coal) plants. But we wouldn't need much in the way of new power lines.....

Malcolm; I also support much more nuclear together with solar and wind for daytime peak lopping. Our Ontario government is paying the steep premium for solar power into the grid to spur investment to build them. If solar did not get this premium at least for a temporary period, which type of plant as an investor would you rather spend your money on ? A super-high-volume output nuclear plant that makes a relatively huge rate of income, or solar that has a fraction of its output and only works 50% of the time at best.

I am not down on solar for small-scale private use rather I like to dream of having my rooftop covered, and yes battery storage in the house for night use. Even better, use a rooftop system to charge up batteries in the basement during the day, and then transfer the electrical energy from the basement batteries to my PHEV's batteries overnight. I kind of like the idea of free vehicle fuel. But sadly I'll have to keep dreaming until the cost to build such a system comes down enough to become affordable... or maybe I should just move into a new house and have the builder put in the system, and simply add the cost to my new mortgage. It wouldn’t take rocket science to figure out the payback period of less reliance on the grid's supply.

Granted BEV's are up to 4 times more efficient, but that is not for comparable automobiles. Today's 'efficient' cars that are comparable in features and size to an electric are double the norm in efficiency. Say 30-40 mpg (see Europe, Asia) instead of our 18-24 for the gas efficiency you quoted. In addition to that, where is the power needed to support the return of the demand destruction caused by today's high prices? We've reduced our total miles in recent years, but that bucks a trend of miles driven equating to economic growth. In other words, conservation is elastic where efficiency is less so. There are other benefits, like pollution and extended lifespan, that support the electric side but I'll stick with the energy discussion.

Granted "a significant" penetration of PHEVs could be charged at night, but does that include a mandate that they will be? How can the grid accomodate some unforseen national event that alters public habits and causes them all to go charge up during peak? Any central system has to accomodate an individual desiring to do so, but can't discriminate against others for wanting to do it too.

Can you be more specific than "most" sites can accommodate 2 or more times the reactors they presently have? Does this mean our current sites can go from 107 to 200 or 400 or the 500 that we'll most likely need? What does that do to the projected cost of those reactors? How does that impact the transmission lines in those areas? How much will redundancy cost on those now ultra-high capacity transmission lines?

Is there some proposal to change the rate structure to a more deregulated, smart one where these cheap nuclear plants won't charge the ever-increasing going rate? We never did receive our "too cheap to meter" promise and in fact got stuck with incalculable hidden tax based, 50-year subsidies. Will we get it this time?

Is the FPL study anywhere close to the correct cost for new nuclear plants today? As I remember, they got 3 different proposals which ranged from $10B to $14B/GW. That's over $8k/kW which can be beat by nearly any other technology including PV.

Ground source heat pumps operated by electrically driven compressors have been around for years but their efficiency in Canada has never competed well with NG furnaces for winter heating. Things are changing however, one company has developed a new much higher efficiency design, has govenment support, and may be an option soon for new home builders in Canada to offer. Gotta like those creative engineering types.

The new heat pump design I mentioned is called the "Acadia" made by Hallowell International in Maine, founded by former US navy cryogenics engineer Duane Hallowell. It reportedly works in -30C, great for Canadians. www.gotohallowell.com

So what is the alternative to Let's check them:

1. Drill more oil. That won't work. We are running out of oil. And 70% of oil use is for transportation.

2. Ethanol/biofuels. Not enough of that to make a difference.

3. BEVs. Possible, but even more of a technical challenge.

4. Mass transit. Large infrastructure and cultural changes.

5. Coal to liquids. Also a big infrastructure change. Also dirty. It would probably be better to burn the coal for electricity than make liquid fuel out of it. (It looks like we don't have oodles of coal either...)

6. More efficient ICE. As Todd points out, there are limits to what this can buy us.

So, I say quite griping about the infrastructure problems of PHEVs. If peak charging is a problem, then put the chargers on brown-out switches. Start building that smart grid stuff we all know we need.

It should pointed out that even $0.20 per kw-hr electricity (the cost of PV electric) equates to $1.60-$2.00 equivalent in gas. There's plenty of margin to make these things work.

As for capital costs of T&D and other infrastructure in support of nuclear, any improvements of the grid would benefit virtually all other sources in the mix as well. The costs for improvements are rising for any type of infrastructure change at the same time that vast infrastructure changes are needed. We need a better grid for any and all new generation, regardless of type so it is fruitless to try to pin extra T&D costs on nuclear as though it would be the only culprit in driving up the price of deliverable electricity.

Still, as you say, we need to know the full cost of nuclear, but we also need to know the full cost of every plan for an honest comparison.

Granted there are other benefits like longevity, but how can you monetize them to get one plant built? Ok, now can you repeat that 399 more times?

Economies of scale can work both ways. You save on redundancy yet compromise on it at the same time. How many people lose power when a single plant is supplying 4-7 GW from a single line? For a comparison to distributed generation, what is "the system capacity" of residential refrigeration if 4% of them fail each year?

Regarding low land use, please quote a source on this which includes cradle to grave activities. The only sources I've found including all activities (which advocating site rarely do) show it pretty equal to CSP.

Regarding emissions, fuel costs, emissions... same argument. And this bit about 60 years is also misleading. I can say that about anything that I can replace individual components on. Ask me sometime what my rates did 2 years ago when our "cheap" nuclear needed an overhaul in a state that's completely coal and nuke. But you are correct in that PV is probably the only system incapable of being maintained for a full 60 years.

The transmission costs I referred to were the added cost of making transmission not single-point-failure succeptible. Being so highly concentrated as it is, it can't justify any transmission redundancy. Compare this to any distributed generation or distributed storage (especially PHEV charging) use. These all increase redundancy at a negative cost due to reducing the line load. How is increased nuclear capacity comparable? The only extra cost incurred may be for grid intelligence which we have no idea where it will lead.

I'm completely in agreement that we need the full cost of all sources. I have done this for many of them, and even published some here, but have yet to receive an answer relating to nuclear. I would just like everyone to put their apples on the table so we can all compare them.

"but their efficiency in Canada has never competed well with NG furnaces for winter heating" &

"The new heat pump design I mentioned is called the "Acadia" made by Hallowell International in Maine, founded by former US navy cryogenics engineer Duane Hallowell. It reportedly works in -30C, great for Canadians."

Is it possible that you are thinking of air sourced heat pumps? As I understood them, the ground sourced ones don't have such issues. (Maybe your ground temp is getting under -30C?) Still, 200% is great for an ASHP at that temp.

I believe you're correct, it is the air sourced heat pumps with the problem. Ground sourced pumps can and do work up here (the ground doesn't get to -30C very deeply very often) but these have historically been far more expensive for a new home builder to use than simply dropping in a NG central furnace. The only exceptions are where there is no NG feed line nearby like in many rural areas, but then home builders generally stay away from building in rural areas until all the services are in place.

Let me start by saying that I was not making any philosophical statements in my post, about what the best energy options/plans are, etc... I was just pointing out what I believe is a flaw in a specific analysis that sought to answer a specific question, i.e., how many reactors would it take to power US transportation.

In reference to some of the other discussions, I enthusiastically support solar energy, and believe that it would be rational for other nuclear supporters to do so as well, given the synergy between the two sources. Nuclear and solar are natural allies, since they supplement each other very well (as others have pointed out). Wind on the other hand...... (it would be more of an ally of gas). Solar does not compete with, or displace nuclear. It displaces (and competes with) gas, and reducing gas use wherever possible is very much desired. In fact, solar displaces gas whether its used for power generation or space heating.

The analysis given in my post is completely independent of issues related to the size or efficiency of the cars in question. The discussion was strictly based on the efficiency of converting thermal or electrical energy into mechanical (shaft) work. The only potential issue is whether my assumption of 20-25% ICE engine efficiency is too conservative (low). Does anyone know of significantly higher efficiencies (in hybrds, etc...)?

On the other hand, it must be noted that Chris referenced current US consumption figures for gasoline and diesel. Thus, the correct ICE engine efficiency to apply for my analysis would be the CURRENT average efficiency for US vehicles. Basically, I calculated the number of reactors required to deliver (using electric motors) the same total amount of shaft work being used by US cars today. The fact that future PHEV or EV cars in the future will probably also be more efficient (i.e., require less shaft work per mile) only makes my analysis that much more conservative.

BTW, I never claimed that the analysis accounts for increases in number of cars or number of annual miles driven. Any increase in overall vehicle miles will scale my answer up accordingly.

As for other needs (for reactors), replacing coal would require another 250 GW of capacity, or ~200 more reactors (for a total of 350 new plants). Of course, if we did that, nuclear will have single-handedly removed the majority of US CO2 emissions by replacing both coal (power) and oil (transport). I'm not sure any of us are planning on doing that much with nuclear alone. The point, however, is that it would be feasible.

I can't be much more specific on the spare reactor space issue. My impression is that most sites can handle about twice as many reactors as are already there. My guess is that if we build 100, the great majority of them can be at existing sites. At 150, still most at existing sites but a significant number of new sites would be required. As you go beyond that, my guess is that most further plants would be at new sites.

I would encourage PHEV users to recharge at night using discounted rates. The whole thing would also require some intelligent meter/charging system (nothing very expensive). It's true that PHEVs would not always be charged at off-peak times, but I believe they would be in the great majority of cases, which is good enough. Even if we had to build a gas plant or two to provide peak-time charging for a few PHEVs, it would still be more efficient than burning the gas (or equivalent oil) directly in an ICE. And with smart rates, the few daytime chargers would pay the full cost.

Once again, the PNL report suggests that no new power lines would be needed, even for a significant number of PHEVs. Off peak hours would simply start to resemble peak hours, in terms of both generating resources and grid flows. I did assume that if we started running peakers most of the time, we'd start replacing them with cheaper, baselod plants (like nuclear). You may have a point that building a nuke (at an existing nuke site) to replace a gas peaker plant (that is now running flat out) may not be as simple as it appears, because the new capacity is not in the same grid location as the capacity it replaced. It's possible that some grid investments would be required. As with everything, it will all come down to the economics. The cost of any grid modifications would have to be added to the total cost of the proposed nuclear alternative. It's possible this may result in a slightly reduced number of such replacements. More generally, however, other that the specific issue I discuss above, nuclear shouldn't require much more in the way of grid investments than any other option (wind would require more).

As for market structures, if the deregulated ("free") market applies, utilities will charge the going market price for power, which will be based on the operating cost of the most expensive marginal supplier (which will be a relatively low efficiency gas plant). They will keep the difference in generation cost (between that plant and the low cost nuke) as profit, as a reward for making spending the upfront capital (and taking the "huge" risk, etc..?). Under a rate based system, they will charge something like what it really cost, plus some set profit. I am confident that, in the future, for baseload, nuclear will be a cheaper option than gas or coal with sequestration. Thus, under the market system, it will make little difference, and under the rate base system, you would want nuclear (as a ratepayer).

Finally, the industry NEVER promised electricity that is too cheap to meter, in any remotely official capacity. In fact, they have always (from the 1950's on) maintained that nuclear would be at least somewhat more expensive than coal. The issue was posed as a question as to whether nuclear's lack of air pollution was worth the extra cost. Interestingly, after 50 years, the basic issue/question really hasn't changed much.

Current HEVs (Prius, Ford Escape) use the Atkinson cycle, which is about 28% efficient, once they are warmed up, etc.

Like HEVs, PHEVs would also enjoy regenerative braking. With the bigger battery pack of PHEVs, they may recover even more energy than HEVs do today. It would be reasonable to say that HEVs are about 50% more fuel efficient than comparable cars. A regular Ford Escape gets about 22 mpg. The hybrid gets 33.

But I don't think you can replace ALL of the oil use in transportation. An optimistic estimate is 80% (albeit at the higher efficiency). So if we are using 1.0 units of oil now, if we changeover completely to PHEVs we might need 0.13 units afterward [(100%-80%)x66% ]. Just an estimate.

It would seem to me you'd need much fewer than 100 new reactors. Maybe as few as 50. As others have pointed out, the devil is in the added infrastructure, not to mention the 10s of millions of automotive storage battery packs needed.

The problem is people perceive the risks of nuclear power to be much higher than they are and they perceive the risks of driving a car as much less than they actually are.

The safest place I am every day is at work. Our operators know their business and as an ex-operator myself I have no doubt that having my office next to a nuclear reactor is the very safest place I could be in North America. Much safer than a coal oil or gas plant by far. And since I don't have to climb onto my roof top to clear snow off my non-existent solar panels - much safer than PV I think.

Len rest assured I and all of my colleagues will keep your family very safe it is the only job we have.

Malcolm

I would start by noting that we have to be careful to compare apples to apples. Cost quotes are often for overnight capital costs for the power plant only, whereas the FPL quotes include both interest costs and the cost of associated grid investments. That said, my basic answer to you is that, no, I don't find any of the recent (very high) nuclear cost estimates to be believable at all.

The highest (overnight) capital cost that I am willing to believe is ~$4,000/kW, even for a first of a kind plant. Breakdowns of plant costs show that the recent rise in commodities prices (steel, concrete, etc...) could only explain an increase of ~30-40% in plant capital costs. Meanwhile, nuclear plant cost estimates have literally risen by a factor of 3 or 4 over just a few years. I believe that the industry is high-balling (padding) their cost estimates right now. Why would anyone do that? I can think of a few reasons (which follow):

The main reason (I believe) is that they are simply charging the absolute most the market will bear. In a carbon constrained world, the nearest competitor for large-scale baseload is gas (as coal w/ sequestration will cost a lot more). As shown in the FPL analysis, nuclear is cheaper than gas even with a very high nuclear capital cost. Their analysis convinced the PUC, anyway....

I don't believe that this is due to a single "conspirator/profiteer". What's really happening is that every entity involved in the whole project, down the entire supply chain, knows that it is in a position of advantage (due to the high cost of all other alternatives, and therefore the ability of the utility to "afford it"), and therefore, each one raises their cost (and increases their profit) a little bit. This effect then cascades and multiplies down the whole chain, resulting in a dramatic increase in final cost. In other words, the additional profit is being split among a large number of entities.

The point is that, in a free market, if you bid out a task among several intelligent suppliers, the winning bid will not equate to the cost for the lowest-cost supplier, it will be just below the cost for the second-lowest-cost supplier. The lowest-cost supplier has no incentive to charge less than the lowest possible bid for the 2nd guy, and he will therefore take the rest as profit.

In our case, this means that, amazingly, nuclear plant cost estimates will always be just low enough to barely beat gas (given expected carbon constraints). I firmly believe that the best way to predict nuclear plant cost estimates for future years (or any recent past years) would be to look at the cost of the natural gas alternative, as opposed to looking at anything directly related to the cost of building a nuclear plant. My observation is that nuclear plant cost estimates have tracked the cost of natural gas to an uncanny degree. Looking at the record, it seems clear that they are charging exactly what the market will bear, whether they admit it or not (even to themselves).

Given that the market can bear it, there are other reasons to high-ball the cost estimates. One is managing expectations. A new phrase heard at industry conferences is that "we have to under-promise and over-deliver". It is very important to the industry that the first wave of construction projects not be viewed as a failure. Specifically, the record cannot show that there were "cost overruns". One way to do this is to make a very high initial cost projection (i.e., set the expectations low), so you can either come in under budget or at least be very sure that you will meet budget. If the price of alternatives is so high that you can do this, why wouldn't you? Thus, they are doing precisely that, to the extent that the market will allow.

One final reason to err on the high side with the cost estimates is that it allows you to argue for more govt. subsidies. A higher level of govt. support goes straight to the bottom line (increased profit). They know that there is a strong desire in this country to build new reactors, and they sense that govt. is willing to provide a significant amount of help, if necessary, to make this happen. Govt. would not offer more help, however, if they thought that the plants would be built anyway. These high cost estimates help them make the case that more help is needed.

To you nuclear supporters, sorry for the level of cynicism in this post, but it's a little much to ask to have cost estimates suddenly (and for the most part, inexplicably) increase by literally a factor of 3-4 in just a few years, and not have people like myself (who want to believe in the technology) get just a little bit upset. As I said earlier, I simply don't believe these cost estimates, and am searching for an explanation. Either the industry was lying to us then (just a few years ago), or they are lying to us now. I'm maintaining hope that the truth is somewhere in the middle, at least.

Fact is I am sure that no-one really LIKES any power station of any sort. I wouldn't vote for an oil refinery in my town but I really do like driving my convertible so I have to make a compromise.

Sweden will be builidng new nuclear plants before very long it is just a matter of time.

I do agree with Todd that a major difficulty for nuclear is hiring and training qualified staff but it is not that hard to operate a nuclear plant really so I don't think that will be an impossible task. Trades and skilled staff to construct them will be a challenge as it is for most major industries as we seem to value law degrees more than we do skilled trades and engineers......but that is rapidly changing....ask any welder in the tar sands in Alberta.....they just name their price.

Despite what many say here nuclear power is booming as people and Governments realise that their standard of living will decline rapidly if they do not develop a long term sustainable energy supply that is reliable.

And maybe your right Fred that throwing a little bit of solar and wind is a political ploy to appease those who believe those technologies can actually meet the electrical demand while they develop nuclear programs that will be the backbone of the grid system - as it has been for many years. As usual Fred you are right - I think that is precisely what is going on.

I would be interested in reading your papers on nuclear power Fred. Having been in this business for nearly 40 years I think I can add at least 10 cents worth.

Malcolm

Labour costs are also much higher. There is a dearth of every trade and those that can do the work just name their price. We have actively discouraged our youth from entering the skilled trades and technology and we are about to pay a heavy price for that stupidity. As my generation retires there is a shortage of people to replace us and they will not work for the wages we were paid at their age. They know their worth...and they don't come cheap any more.

The cost of raw materials has gone up into the stratosphere. Copper, aluminium steel, concrete just about everything is many times the price it was when I joined the industry.

These are the key reasons why nuclear power capital costs have gone up. But as I said earlier the key to lowering nuclear costs is mass production. Once the skilled workforce is rebuilt and designs are standardised then we will see costs fall...unfortunately it is going to take time....and probably mean that us old guys are going to be working into our 70's. But I don't think most of us mind that.

Malcolm

Part of it also is contingency padding. Especially in the USA plant constructors and operators do not want a repeat of the Shoreham fiasco so they are putting in place sufficient financial margin to allow for that possibility.

But both industry and Governmen must understand that the key to inexpensive electricity is to lower the capital costs of nuclear and that requires mass production and a long term committment. Not one off designs and wishy washy go - no go politics.

Malcolm

But the cost is astronomical though. Probably in the range 40 - 50 thousand dollars. The interest on that alone pays for my electricity and gas for ever so although I quite like the thought of it and I could probaly afford it my financial brain tells my technological brain that I would be stupid to do that.

And my wife would prefer a nice holiday instead of a bunch of PV panels and pipes underground and she tells both my technological brain and financial brain that they are both out to lunch - and of course - she is quite right.

Malcolm

"But the cost is astronomical though". Exactly why home builders don't implement them and go for above ground ACs and NG or electric furnaces. The Hallowell Acadia air-source design is above-ground and has some potential to compete.

(A friend of mine built his own house on a rural farm property in the Niagara region in the late 1980s where the nearest NG line was almost a kilometer away. The gas company Union Gas wanted to charge him tens of thousands of dollars to run a pipe to his house, so he opted instead to put in a ground-source heat pump system for the AC, and an electric heating furnace.)

It makes sense to me to put at least a significant proportion of our eggs into an alternative very long-term sustainable resource, and the one that makes sense to me is solar thermal, especially as Todd above has requested a clear statement of the cost TODAY of new nuclear, even proposed some very provocative estimates, and gotten no response. What, is the industry keeping that a secret now? Forget talking cost of solar generation until you can put a non-guesswork cost of nuclear out.

It is very likely that the support solar and wind is getting from governments is indeed merely to appease voters, with the REAL plan behind the scenes to build much more nuclear. I think however it may also be a way to create more theoretical competition for nuclear to reign in construction costs, or at least keep profit taking from skyrocketing, as James points out is there for the taking.

An interesting phenomena though is that companies literally line up to build solar and wind generators, and invest in their technologies' R&D. I suppose the prospect of getting into the electrical generation business is generally viewed as stable, lucrative, and virtually guarantees a decent return on investment. I mean what other business can you think of that has a guaranteed and growing demand for your product, and lots of R&D investment continuously going on to improve your plant technology, with limited alternatives for competition to emerge.

"IF any radioactive release. It WOULD be game over for nuclear power........society WOULD collapse back to the horse-drawn era"

I dunno Len, I'm not that pessimistic. Look at Ukraine. Despite suffering a nuclear event far more serious than the worst that could ever happen for a Western plant, they show as much enthusiasm for nuclear as anyone:

http://english.people.com.cn/90001/90777/90853/6444673.html

They shut down the other reactors at Chernobyl, but have kept all their other plants. Since then, they've brought several more one line and are planning to build even more in the future. I know they don't have quite the same political system, but still......

Also, I doubt that the public (even in the West) will choose to go back to a pre-industrial existence to avoid nuclear, even after a severe accident (or several). There have been many signs, recently, that people's attitude changes quite a lot when their pocketbooks are tangibly affected. Look how many (most?) people are willing to blow off the global warming issue over the potential loss of a small (~1%) amount of material wealth. Poll results on how much people are willing to pay to solve what they're being told is the greatest environmental concern ever are thoroughly depressing (~0.25%, if anything at all). And going back to non-industrial society represents a material standard of living reduction that is orders of magnitude larger than what would be required to solve global warming, or what we're facing now due to gasoline costs, etc...

During the Industrial Revolution (and Guilded Age), we tolerated huge numbers of deaths and huge environmental impacts, from very unsafe industries/practices and massive pollution, because we considered the economic/material gains to be well worth it. The Chinese are making the same choice today. The same judgement will apply in the reverse direction (perhaps even more so, because now we've gotten used to this standard of living, i.e., are "spoiled"). Hypothetical health impacts from occasional releases would fall to the bottom of everyone's priority list. Indeed, those "issues" are the sort of things that only very rich, effete societies (with no real problems to worry about) have the luxury of spending mental attention on. I know those voices you mention will be out there, but if people are faced with a large reduction in their standard of living, these voices will not be listened to.

People have shown no willingness to accept even minor economic losses over "environmental issues". They certainly will not voluntarily opt for very large ones.

http://www.energycentral.com/centers/news/daily/article.cfm?aid=10642648

Apparently, the builders of the new nuclear plants at Vogtle (Southern Co.?) are offering some of the new plant's output to this minor utility at a cost of 8 cents/kW-hr, for 2016 onwards. The offer is for 8 cents/kW-hr in 2016 dollars, which the small utility representatives said was equal to 5 cents/kW-hr in 2008 dollars (6% inflation?). Since the small utility is simply getting a block of (guaranteed) electricity for this fixed price, this 8 (or 5?) cent/kW-hr offer price represents the full cost of electricity from the plant, including capital, etc..

Anyway, draw your own conclusions from this....... It seems (to me) that Southern Co. thinks that the total nuclear power cost will be ~8 cents/kW-hr, in 2016 dollars. They seem confident, in fact.

BTW, this article brings up another point that I failed to mention earlier with respect to making apples-to-apples cost comparisons. In addition to financing (interest) and transmission charges, I believe estimates like the one's given by FPL include "escalation". That is, they account for inflation that will occur over the course of the project. I think what they're calculating is the total amount of (absolute) dollars that will be spent, regardless of the year that they were spent. This may be to make the accounting simple. Or, their calculations may be predicting what the kW-hr cost will be for the plant's output, in the year that it starts up. I'm not sure.

In any event, as this article shows, this effect can be very significant. Thus, one should be careful not to compare cost estimates like these to overnight capital cost estimates (for other sources) that are given in 2008 dollars. This may be one of the reasons that FPL's analysis showed that gas would be more than nuclear, even with these "absurdly high" nuclear capital cost numbers. What will gas cost in 2016, in 2016 dollars (not 2008 dollars). It's already clear (based on futures markets if nothing else) that gas will be well over $10/MBTU, even in 2008 dollars.

I take your point over nuclear incidents. The public appear to accept frequent deaths of coal miners here and overseas as a cost of doing business but appears not to be able to accept TMI which did not kill or injure anybody...a gigantic and costly screw up to be sure but not in the same league as Bhopal for example. I puzzle over why that is so...I think it is the perceived risk. Interested in any thoughts on that subject.

The good side of TMI is that the nuclear industry learned a hard lesson and the quality of our operations is vastly improved from those days. If the industry repeats anything like TMI - well we will deserve all we get. But I doubt that it will cause the immediate shutdown of the industry - people will still want their lights to go on when they flick the switch.

But your point is well understood by the industry and organisations like WANO (World Association of Nuclear Operators and INPO (Institue of Nuclear Power Operators) do a very thorough job of making sure nuclear power operators keep safety standards high.

Malcolm

That is why solar and wind energy do not appear viable to me. On a small scale perhaps but on the scale I am used to even the largest of these plants is small.

Malcolm

A very good point about gas prices - perhaps our fabulous oil economist Professor Fred can answer that one.

I am always surprised at how instantly prices can change at the pumps. It is almost as if there is not production process involved. The gasoline delivered to the pumps was made from oil purchased some time before so how prices can change that quickly defeats any logic I can offer you.

malcolm

Solar PV and wind was never really viewed to wholesale replace nuclear although (some) Californians and Texans might think it can. As Len says most of us on this forum don't believe so. But smaller scale solar on rooftops, PV and thermal, if distributed to large numbers of consumers has the potential to put a sizable dent in how much nuclear is needed for the future.

My point was our Ontario government (and others perhaps) probably don’t want nuclear to have a monopoly for all new future generators built, and will rig the tax incentives to promote diversification from nuclear. This assumes fossil sources are bound to become extinct over time, and hydro has already exploited all the easy cherries to pick and will not be viable for any large new sites in most places. And as Fred says, any significant government support for solar and wind appeases many voters, ignorant as they may be of the scales of numbers you point out.

James, Thank you for the information. It's a start, but still lacks some of the info I would require to make any sort of fair judgement on nuclear. I hate to press on these so much, but we're still using apples and oranges.

Every factor mentioned as a reason for highballing nuclear is valid for CSP. (Thanks to Malcolm, I'm going to try to stop saying solar so he doesn't picture toy PV cells). These guys are playing the same 'get everything the market can bear' game as is suggested for nuclear. A major difference comes in the way those prices will react to future shortages.

On the labor side, nuclear labor requires much higher education levels and will migrate to 'elite' status, thusly commanding a higher inflation rate. One treveling pipeline welder with some specialized talent currently working in my town is now at $20,000 per month salary because of all the new pipelines going in lately.

CSP, among a few other technologies, will migrate to stamping out higher volume per person hour. This implies automation and assembly line which leads to lower education levels and increases the labor pool competing for the position.

On the materials side, nuclear has no alternatives for many of it's piece parts. They have strict requirements of strength, longevity and basic trust. As plant sizes grow and as weight is added to the safety record of the industry, these parts will migrate toward more specialized status. This will offset some or all of the price reduction from making numerous identical plants. The monopoly factor of those part suppliers may actually increase the price.

CSP, by comparison, is such a new industry that the only projects being undertaken are the well proven low hanging fruit. Thermal storage is not of benefit yet, so it can't be justified. Dual land use is the same way. There's no reason why the entire plant can't be placed over a department store, parking lot, highway or even a cornfield. It's a matter of the desire to deal with a few other issues and that desire doesn't cost much beyond motive. Once people learn of these alternatives, they can begin to take advantage of the as yet unused CHP feature which doubles it's output. Lastly, the materials used can begin to migrate to others being tested now such as plastics, ceramics, films, carbon fibers and concrete for even more dual uses in the materials category. All of these factors push the prices down, opposing inflation. These arguments are even stronger for residential scale systems.

The main point here is that while there are many factors pointing toward nuclear prices declining in the future, there are quite a few forces opposing that. For most renewables, especially CSP, almost all forces are aligned toward price reductions. With the two technologies pretty price competitive today (at around 0.08/kWh), interest will inevitably shift toward renewables. The only possible counter argument is land use, which I can't compare until someone posts nuclear's well-to-plus numbers, but even that comparison ignores dual use potential.

We earned two steak dinners a while back by listening to a guy explain how much money we could save by paying him $2,200 plus labor to place 95% relfective film under all our rafters in the attic. AFTER he handed over the gift cards, I asked him how efficient $42 worth of aluminum foil was. He looked at the gift cards with a sense of loss and replied, "94%". Every technology today is handing out way too many gift cards, but the newer the technology is, the more tin foil tech jumps are lurking.

I beat that to death in a different forum on this site previously. However, in the E&P Investor, I read an intriguing quote wherein a Kuwaiti oil minister opined that for every 1% drop in the value of the dollar, oil went up $4. It was just a quick blurb so I don't have the metrics on where he was starting the countdown. Clearly given the appreciation of the euro vs the dollar for the past 9 years, in relative terms the "pain" of the current oil price hasn't been as bad to the Europeans using same. Given the lack of fundamentals in the Euro zone however, I don't see much further opportunity there, in fact some 20-30% of the current appreciation seems to be more of a bet against the dollar than "for" the euro.

In Sweden, if the price of physical oil goes up, the price of motor fuel OFTEN goes up the next day. If the price of physical oil goes down, the price of motor fuel OFTEN goes down the following day. In other words,for all practical purposes the price of motor fuel is being set by the oil exporters and not by the gas station managers, who therefore cannot be accused of being price gougers.Of course, this is an ideal arrangement for the station managers as long as the trend price is up, as has been the case the last few years. Moreover, it must work for them otherwise they would adopt another strategy.

I also wonder if the spot price being referred to in Toronto is the paper or the physical price, although it may not make much difference if there is sufficient correlation between the futures price and the (physical) price in the future. Naturally, there could be other (and better) reasons for adjusting the price in the manner suggested above, but this simple explanation makes sense to me.