The Era of Cheap Natural Gas Ends as Prices Surge by 1000%
bloomberg.com
bloomberg.com
Only the central bank head and committee’s opinion matters. They are still pretty split on what to do but that is normal.
You can ignore things that senators say when one expresses concern over the money supply, unless dozens of senators say it.
It is much more likely that a scare gets them to pass a prewritten bill which forces the federal reserve to accelerate more money creation.
(It creates money by purchasing investments from people at inflated prices, so people like that and try to make it do more of that)
https://markets.businessinsider.com/commodities/natural-gas-...
https://www.cmegroup.com/markets/energy/natural-gas/dutch-tt...
I’m also interested in the idea that we could overbuild solar/wind arrays and make SNG (Sabatier reaction) or town gas with the excess energy. Even if the process is currently 30-40 % efficient, renewable energy has come down in cost enough to make a 2x or 3x larger array more reasonable, all things considered (e.g. environmental concerns).
That's only one half of the equation though. You'd have to integrate the efficiency loss from transmission with the effiency loss from burning gas in multiple smaller generators rather than one large one with electrical distribution.
What P2G can do is allow one to stack several benefits from the one-time cost of making the gas: storage at the generation site, transmission, and storage at the far end of the pipeline.
"US oil prices have surged more than <infinity>% from a record low in April 2020 due to the pandemic".
1000% is an 11x increase but to see that easily you have to enumerate the values 100% = 2x, 200% = 3x, ... , 1000% = 11x or do a quick inductive proof.
Why not just say 11x? The article pointed out that Asian LNG prices increased six-fold.
Doesn't this also make coal more competitive against natural gas?
Solar in the Sahara great. Wind in the uk great.
Solar in counties with moderate climates requires effort to moderate between supply and demand however.
also, doesn't help when there is a drought, like in the West, and the dams have no water to produce electricity from anymore.
https://phys.org/news/2021-05-carbon-emissions-considerably-...
About dams and drought:
Dams may still have water, but for how long?
https://www.washingtonpost.com/national/health-science/today... (2015)
I'm 100% certain we could go to a co2 neutral solution not one involving nonsense like clean coal or gas. You need to buffer supply and demand from __any__ supply to increase efficiency. If your not doing that we might as well start burning trees for power
Germany is a country with absolutely terrible solar resources, but even they are starting to make solar work on their grid. And they spent a ton of money to subsidize the solar industry in its early days to drive down future solar prices. So even the worst case scenarios for cost are not hopeless.
That means it’s too expensive. If it made sense everyone would be expanding solar/wind quickly and all fossil fuel plants would be being shut down.
That’s not happening though because renewables+storage for base load costs a fortune.
I'm not sure if I'm missing some sarcasm or something?
Not to mention the ceiling in Si based solar panel carnot efficiency which the whole industry is banging it's head against the table over.
Solar is to renewable as fusion is to fission 30+ years away. At least with fission the promise is clean limitless energy not higher efficiencies and the ability to recycle materials in a slightly less labour intensive way
In any case, the biggest expense of solar panel recycling is transport of the panels to the recycling center.
> Not to mention the ceiling in Si based solar panel carnot efficiency which the whole industry is banging it's head against the table over
I'm not following what you're saying. Carnot efficiency is a limitation of heat engines, not solar panels. And nobody is banging their head into solar panel efficiency limits, increased efficient of panels only enables cheaper costs. In contrast, the limited efficiency of large heat engines, such as nuclear or gas or coal electricity plants, means that waste heat must be dissipated into the environment. And when using natural bodies of water for this, the common choice, we are going tons be turning off a lot of these more often as the climate warms. This is already happening frequently in Europe. Solar panel efficiency declines a bit in heat, but they don't trip off.
> Solar is to renewable as fusion is to fission 30+ years away. At least with fission the promise is clean limitless energy not higher efficiencies and the ability to recycle materials in a slightly less labour intensive way
Solar is here today, we deploy hundreds of gigawatts of solar each year across the globe. It's the cheapest source of energy nearly everywhere in the world. Even the IEA, an organization hostile to renewable energy that constantly tries to undermine it in their editorial choices and modeling scenarios, to the point that the IEA is now considered a joke by many in the business community, has had to admit that solar is cheapest:
https://www.carbonbrief.org/solar-is-now-cheapest-electricit...
Recycling embedded silicon solar panels involves breaking the glass from the substrate reliablely and safely. Extracting the low percentage high value rate earths. Then repurifying the Si from the expensive dopants to remake a panel.
Designing solar panels to make this easier losses vital efficiency percentages.
Not to mention most solar panels claim to pay for themselves in 100yr in some regions but have a lifetime of 30yr. So yes then recycling must be built into the model.
And of course common to both electrical motors used for panel positioning and orientation. Which are a common repairable and understood thing.
We expect that U.S. consumption of natural gas will average 82.9 billion cubic feet per day (Bcf/d) in 2021, down 0.5% from 2020. U.S. natural gas consumption declines in the forecast, in part, because electric power generators switch to coal from natural gas as a result of rising natural gas prices.
There should be some incentive not to drive an F350 to an office job…
Thats a pretty big deal.
Not sure about that
and 2x worse https://www.fuelly.com/car/subaru/wrx
I don’t know why there are no diesel-electric trucks. If you need torque, do what trains do.
https://www.fuelly.com/car/ford/f-350_super_duty?engineconfi...
Subaru Outback is about 23 mpg.
https://www.fuelly.com/car/subaru/outback?engineconfig_id=86...
Of course those are self selected samples and not independent tests, but still probably close to what most drivers will see in the real world.
Usually the consumer midsize crossover nets out around 20.
I think it should be expensive enough so that at least a median income person making a completely frivolous trip stops for half a second to consider the cost.
I'm sure it's more complicated than that. Lower income folks who have less of a choice, for example. A real policy would take some work.
I would guess that Tesla owning households still have higher than average fossil consumption at present because their higher incomes also positively correlate with flying more and consuming more goods that were at least partially made with fossil fuels. The very poorest people in the US can't afford to drive even a used car.
London realized this as the early efforts to reduce costs for zero-emmission vehicles went to Tesla and BMW owners, not the tiny/cheap electric cars everyone expected to come to market.
"revenue neutral carbon tax where an equal amount of money is rebated to everyone" doesn't sound like it's specific to gas for cars.
> London realized this as the early efforts to reduce costs for zero-emmission vehicles went to Tesla and BMW owners, not the tiny lightweight/cheap electric cars everyone expected to come to market.
Is that bad? Normally those incentives are a fixed amount per car, so in climate improvement per dollar it should be similar or even better for big fancy cars. And anyone that designs a small cheap electric car can still get the incentive, so it's not like those fancy cars are to blame if there's a lack of them. And we are getting more variety as time passes.
If you want to give less money to rich people, don't exclude them from the car incentives, give them an unconditional tax and let them get money back with the car incentives.
Also big cars don't congest much more than small cars, do they? When you take into account the space between vehicles, the difference isn't that great.
(And again if the issue is expensive cars specifically, you don't want a congestion charge or a fuel charge, you want a supercar charge or a high-income charge.)
Also most tools aren't heavy and "odd hours" will decrease your fuel use!
After that we can add a carbon tax to the transportation sector by adding a tariff that scale with carbon pollution.
After that, carbon tax newly built home heating systems.
After that, continue to add new carbon taxes while monitoring who get effect until one can't add more without harming people who has no choice.
Europe is filled with lower and middle income people as well. They don’t take jobs with a 1 hour drive using a truck that gets 13 MPG.
Natural gas predominately displaces coal, so you must really hate the earth.
Same with other classes of vehicles such as VW vans in the passenger version, the 'normal' ones are all diesel, the fleet version tends to be bi-fuel with a relatively small petrol engine and an LNG underbody tank system. This is a popular solution for taxi fleets in Europe.
And as diesel is coming more and more under scrutiny you can expect the LNG/CNG version of these cars to gain in popularity.
A rounding error compared to all the other trucks/vans/commercial vehicles.
Go look for CNG vehicles from pickups and airport vans on up to heavy trucks on the heavy equipment section of CL and machinery trader. You will see how few and far between they are.
Sorry man, but that’s nobody. 5k trucks a year is meaningless when we’re talking about how natural gas prices will effect behaviors.
People will choose to buy less if alternatives are cheaper and accomplish the same needs, but with something like fossil fuels where all the infrastructure is already setup and fossil fuels are convenient, the end user price going down almost certainly means demand going up.
The only way less fossil fuel is consumed is if people cannot afford it (equivalent to prices rising) or if people prefer something else. Or if there are less people overall period.
In economics terms, you do not only need to get price down, but the whole demand curve. That is, with any given price, there needs to be less demand than currently is. The supply side is fixed. Anything profitable will be extracted and burned. I do not see how anyone can disagree with that.
You move along supply and demand curves to come to the price. Prices move according to demand and supply curves, not the opposite.
For example, if fossil fuels became 10x cheaper, that will flow into all economic activity that uses fossil fuel to be cheaper, which is basically everything. Which then means people will consume more of everything, because that is what people like to do.
The supply side of fossil fuels is definitely not fixed. It is true that sufficiently low fossil fuel prices will cause some producers to not make a profit, who will then stop extracting fossil fuel. But due to the nature of fossil fuels being able to facilitate in almost all aspects of life and being a very fungible source of energy, eventually the steadily increasing demand will cause prices to eventually increase (unless sufficient alternative sources of energy are available at sufficiently cheap prices and convenience).
The world has 8B people, with more than half who can easily consume far more fossil fuel as they gain more wealth and catch up to developed nations. Making fossil fuels cheaper just means more poorer people will gain the ability to buy bigger cars, air condition their homes, start flying to places, etc.
Just look at fossil fuel consumption worldwide:
https://ourworldindata.org/grapher/global-fossil-fuel-consum...
It has been 13 years since fossil fuel prices dramatically decreased, and consumption has continued to rise.
https://www.macrotrends.net/1369/crude-oil-price-history-cha...
Yes, ceteris paribus if you lower the price, there is going to be more demand. But you can't lower the price ceteris paribus because there is not going to be more supply. So in order to lower the price you need to figure out a way to lower the demand. Be it regulation, taxation or cheaper alternative products or something else. As long it is cheaper to run a solar panel than a generator in a developing country, it does not matter if the fossil fuels become 10 times cheaper, people will use the solar panel.
Higher price means higher resource extraction and consumption, that is a fact that you can deduce by just looking a the supply side. If you double gas/oil price, for sure more is going to be extracted? (And by price I do not mean post-tax/regulation consumer price, but the price the gas/oil producer gets from the commodity in the market)
Not sure that would have the impact you think. In convinced that suppliers would just stockpile in this case. Remember at the start of lockdown when cude turned negative on the stock markets.
Didn't really do much other than push the price of petrol in a car tank upwards.
If you look at periods of cheap gas they typically lead to more use of flights, bigger and less efficient cars, and a reduction in alternative investments.
Compare the cars from the 70s oil shock like the VW Golf with the SUVs of the 90s.
https://www.britannica.com/science/natural-gas/Location-of-m...
No need to berate OP for outlining a simplistic model of a market solution. The hard part isn't creating the policy anyway, it's having the political capital to get it approved and put into law.
Edit: And that lobbying and competing interests get in the way of actually pricing externalities correctly is the most obvious flaw of modern neoliberaism, but the theory isn’t the issue there.
By neoliberal standards even a CO2 tax/tariff would be considered government intervention that must be avoided at all costs. Neoliberalism is about diminishing the role of the state in the economy.
Capitalism itself has enough leeway to introduce a CO2 tax, neoliberalism doesn't because it is a self contradictory mess of wishful thinking. For neoliberalism letting lobbying and competing interest get in the way is part of the idea.
Is it a sellers market and buyers are outstripping supply? Big profits, dig everything up.
Is it a buyers market and sellers are outstripping demand? Low or no profits, keep it in the ground.
High prices don't mean high profits. Low prices don't mean low profits.
Once you add a carbon tax you have a high price with low profits. Some countries subsidize coal mining. The price of coal is cheap even though there are high profits for the companies.
Seeing how Poland still gets approximately 70% of its electricity from coal, I wouldn't say so. Also until the grid-scale storage problem (at least on the level of storing several days of grid consumption) will not be properly solved (personally I am fan of underground pumped hydro storage built on top of artificially dug cavities), I don't think we will see large predominantly renewable grids not backed up by natural gas power plants.
And don't forget that natural gas consumption is not only about electricity. But also about heat generation (both in households and industry) and production of various chemicals.
If your spinning up a new GW of generating capacity, it’s easier to find spare room that no one fights over with solar/wind than it is to find a spot for nuclear.
Could we have faster permitting of nuclear plants and apartment buildings? Sure, will we? Almost certainly not.
Nuclear has proven to be very unreliable to build due to massive complexity compounded by the need for extreme accuracy in construction, since we don't want to need to go in to fix core components after they've been turned on. This is precisely what advanced economies are not good at.
Why did you paste a link to that editorial? It does not seem particularly relevant to your question.
Just think about it. China is burning so much coal for the sake of getting rid of coal. There is no better way to use that electricity.
Other reactor types are far far far out on the design schedule, and more speculative in terms of technological success than any of the many new types of battery chemistries that have been announced this year.
Wind is a very different beast in term of charge cycles and capacity requirements. We are nowhere near having it economical to install batteries with multiple weeks long capacity that get a charge cycle of a few times a year. For that you need stored energy technology like reverse hydro or hydrogen production, and they are are quire bit away from being economical sustainable. Reverse hydro has many issues and has resulted in a declining optimism in the last decade, and using wind to produce hydrogen cost about 6 times as much as any other hydrogen production method. And we don't currently burn hydrogen for power as it is already prohibitively expensive. Still it seems as our best bet for storage, which should give a hint how the economics are between nuclear and storage.
Michael Shellenberger is not a reliable source in my experience, he's far more invested in ideology and pushing cultural wedge issues than the technology and providing real solutions.
It would be better if they were like cars or solar panels. Good for 20 years and then you replace them. With something as dangerous as nuclear the benefits of longevity are strongly outweighed by the downsides of keeping immature technology around.
To keep it short. Nuclear is not an attractive product. Change that.
And then there is the wider impact on the economy, if this causes sustained high inflation that could further increase wealth inequality.
My hope is that this leads to harvesting more methane (natural gas) from cattle waste and similar sources.
That's not really true anymore. While heat pumps have been popular in Europe and Asia for a while, they are taking off pretty quickly in the US and Canada in the past few years, even in colder climates.
I'm in the Great Lakes and I heat an old drafty Victorian with a heat pump - I'm saving money and literal tons of carbon emissions over natural gas.
Particularly when the politician who oversaw it is now working for Rosneft:
https://www.theguardian.com/world/2005/dec/13/russia.germany
If anything, I really hope this spurs Europe to build out widespread modular nuclear power plants across the continent.
However, I think the picture of how rosy a nuclear future could be was oversold, even in the last century. Construction performance in the 1970s was abysmal. Even the most successful deployment, in France, stopped short of its initial plans, and did not fully decarbonize the grid.
Starting new deployments of modular reactors means talking about new construction modes, modes that we have no idea at all if they will be effective or cost efficient. It's a huge gamble, that even if it pays off, won't start paying off until 10-30 years from now. Nuclear is not a technology that we can depend upon to save us now. Which is not to say that we shouldn't try, it's just that we need to have backup plans in case Nuclear can't be built.
I'm sure I read this argument at least 10 years ago...
Which is why people are talking about modular nuclear reactors now, rather than large GW reactors. The industry had rejected modular reactors in the past as inherently more expensive than large GW reactors, but the difficult of constructing GW scale reactors has led them to try something smaller.
Will modular reactors succeed? Who knows! We will see. But it is definitely a gamble.
And an oil pipeline use is to reduce costs of bringing oil from a particular area to market. It doesn't necessarily have benefits that translate to the entire market, unless the change is so big as to move the entire market. And I don't think Keystone was that big, but couldn't say.
Also oil is not generally used at all in our electrical grid. Far to inefficient, and far more useful as fuel for vehicles.
Further, VC Summer has delivered zero benefit to people, despite it costing the average utility bill an extra $20/month last I heard. Keystone has had several phases complete, so there has been oil delivered to markets.
Through the aspect I wanted to bring up is that an energy company spent tens of billions on just transporting fossil fuel from one point to an other. Since it is the customer that pays for it in the end, I suspect most would prefer that their money went somewhere which does not contribute to global warming. If I were a customer of TC Energy, I rather would have seen a failed nuclear plant than a failed pipeline for fossil fuels.
Your opening comment implied that nuclear power would be strictly cheaper because of the higher enthalpy. If all costs were equal, you would be correct. All costs are not equal.
This sort of bullshitting attitude is why nuclear gets a really bad name. It's supporters do not understand it well enough. And if recent history is any guide, neither do nuclear's practitioners.
We didn't build nuclear weapons because they were cheaper, we built them because we desire danger and more danger requires more enthalpy.
By that logic even civilian usage of high enthalpy carries the risk of danger.
And by what logic? I never mentioned civilian use of anything, just that nuclear is more efficient.
Meanwhile, the US has been pressuring EU countries for years to not source their gas from Russia ( up to sanctioning companies working on pipelines ).
To force them to buy more expensive LNG produced mostly in (surprise!) the US. To me it's nothing more than a case of failed geopolitical extortion.
I'm from Turkey and last year the energy production was 30% from hydro electric, 20% from natural gas conversion.
This year, there is a severe drought here and the ratios swapped, 30% nat gas vs less than 20% hydro.
Maybe other countries have similar problem, especially in Asia, so that may explain the demand.
AFAIK, that's also the case right now here in Brazil. The rain in most hydro power basins has been much lower than the long-term average, and to prevent the reservoirs from becoming empty (which would be a disaster, not only because of other water uses like drinking and irrigation, not to mention the damage to the ecosystem from the rivers becoming dry, but also because there is not nearly enough non-hydro power generation capacity to power the whole country), there has been an increase in the use of thermal power generators, many of them powered by natural gas.
For comparison, the oil price actually went negative during that time period. Starting at the price of zero, any non-zero price reflects an infinite percentage increase. Not sure how to calculate from a negative base.
It is not, at all
Russian natural gas executive says promoting alternatives to his product hurts consumers. Ok.
[1] https://www.tennessean.com/story/news/local/2021/07/31/tva-c...
[2] https://www.youtube.com/watch?v=CfSNBn47m7E
[3] https://www.youtube.com/watch?v=WzXwx7oMXmg
EDIT: apparently there's still a substantial advantage on CO2 too.
Utilities continue to use coal even when it loses them money:
https://blog.ucsusa.org/joseph-daniel/new-ucs-research-utili...
Utilities also tend to use long out-of-date costs when doing they planning, and the planning modes are often not available for inspection to regulators or the rate payers.
https://news.ycombinator.com/item?id=27959719
https://insideclimatenews.org/news/03082021/coal-creek-plant...
https://www.sierraclub.org/articles/2019/10/new-report-shows...
https://www.forbes.com/sites/energyinnovation/2019/12/03/uti...
https://oilprice.com/Latest-Energy-News/World-News/80-Of-US-...
Perhaps my use of the word "corruption" comes across as too strong. But for government-granted monopolies, the bias shown by utility planning in recent years can only be described by such a word. There's an inexplicable allegiance to technologies that cost utilities more than renewables and storage, and given that renewables would let utilities charge for lots of transmission upgrades that are a great source of profits, their behavior is really difficult to explain at all without corruption being a motivation. It can't be explained by seeking profit for investors.
My first apartment, in late 70s South Jersey, had gas heat while a lot of old construction in the Northeast was solidly slaved to oil. The economics of gas were well known 40 years ago, but all those oil burners needed to fail first. There was actually a resurgence of coal around that time.
I was big on nuclear right up until 1979, when TMI finally made the case that it might not be the panacea advertised: at least as deployed by the (monumentally corrupt) 20th century private energy sector. Just prior to that the biggest challenge everyone agreed had to be overcome was the waste problem. Seems no one wants to talk about that any more. Today's nuclear advocates sound more and more like the overoptimistic cheerleaders of the 50s and 60s.
Anyway, we just replaced our outdoor gas pack a few years ago. At the time I balked at the few thousand more that a heat pump would have cost (heat pumps make a lot of sense in the South where we now live). Looks like I'll be regretting that one for the next 7 or 8 years.
Also, due to efficiency of modern electronics you get a lot more work from e-oil rather than black gold.
I am confused: is it tenfold or elevenfold?
I think most people understand this.
The era has artificially ended. Thanks to this there has been a great rebound in coal demand. India has now started constructing coal plants to meet coal demand https://www.reuters.com/world/india/exclusive-india-may-buil...
Coal is making a resurgence in the USA too https://www.power-eng.com/coal/eia-u-s-coal-fired-generation...
We are going to see the largest emissions in a decade thanks to the Coal rebound https://www.greenqueen.com.hk/global-carbon-emissions-set-fo...
Congrats USA!
Thus I am a long term bullish on oil and gas. I think oil will go back to 120 level pretty soon in next 2-3yrs.
Asked another way: What's the renewable energy replacement for petrodollars?
Honestly for me the idea of adopting a single countries' currency as the currency used for world trade doesn't make any sense. At some point your country won't have a significant share of world GDP to have influence over the rest of the world economy.
If you are going to adopt a global "currency" you would go for the bancor but I personally don't think there is going to be one global currency. There'll be one for each continent and it's the EU that is going to adopt an EU bancor as the first economic block because the euro is dysfunctional and cannot be maintained as it is.
The stagflation of the 70s was a start of this process but the petrodollar put a stop to it. The US is way more dependent on it now than it was then.
I remember a few short years ago when fracking was dominating the news about oil supply all the talk from the Middle East producers were about just that...limiting production in order to "break the backs" of all the American wildcat frackers,
I guess with a President in office who seems to want prices to go through the roof, its much easier for them to do just that.