The Paris Gravity Well 1

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Published on Peak Surfer on January 17, 2016

PeakSurfer

Discuss this article at the Environment Table inside the Diner

"The idling of rail, barge, ship and pipeline traffic is the biggest change of its kind in 30 years."

 

   The World Bank Guys talked about rates of return and the burden on investors and the unacceptable cost of the doubling of the price of a kilowatt hour. Everyone there had said all of this before, with the same lack of communication and absence of concrete results.

Charlie saw that the meeting was useless. He thought of Joe, over at the daycare. He had never stayed there long enough even to see what they did all day long. Guilt stuck him like a sliver. In a crowd of strangers, 14 hours a day.

The bank guy was going on about differential costs. "And that's why its going to be oil for the next 20, 30 and maybe even 50 years," he concluded. "None of the alternatives are competitive." Charlie's pencil tip snapped.

"Competitive for what?" he demanded. He had not spoken until that point and now the edge in his voice stopped the discussion. Everyone was staring at him.

He stared back at the World Bank guys. "Damage from carbon dioxide emission costs about $35 per ton. But in your model, no-one pays it. The carbon that British Petroleum burns per year by sale and by operation runs up a damage bill of $50 billion dollars. BP reported a profit of $20 billion so actually its $30 billion in the red, every year.

"Shell reported a profit of $23 billion but if you added the damage cost it would be $8 billion in the red. These companies should be bankrupt. You support their exteriorizing of costs so your accounting is bullshit. You are helping to bring on the biggest catastrophe in human history.

"If the oil companies burn the 500 gigatons of carbon that you are describing as inevitable, because of your financial shell games, then two-thirds of the species on the planet will be endangered, including humans. But you keep talking about fiscal discipline and competitive edges and profit differentials. It's the stupidest head-in-the-sand response possible."

The World Bank guys flinched at this. "Well, we don't see it that way."

 

— Kim Stanley Robinson, Sixty Days and Counting: Science in the Capitol (2007).

 While the story coming out of the White House Press Room this week was phrased as a temporary moratorium on new coal mining leases on federal lands, the bigger story was in the details of the review that the President had ordered. Like Robinson's character in Sixty Days, the White House recognized that the real cost of coal is not currently accounted for in its price, so the new review will tally the environmental impacts, including destruction of public lands from air and water pollution from strip mining and failed mine reclamation, public health impacts from transporting and burning coal, damage from ash spills, greenhouse gas emissions and climate change. It will set a price on future leases based on this thoroughgoing review that brings the cost of coal in line with the reality of the actual costs.

If this had to be run through Congress, powerful coal-state Senators like Mitch McConnell would derail it before it got out of committee. As merely Bureau of Land Management regulatory policy, it falls under the Executive Branch, where the President's is the only opinion that counts.

Tomorrow senior politicians, digiratti activists and Hollywood stars ski into the Swiss resort of Davos for the annual World Economic Forum. The theme was to have been the 4th Industrial Revolution – robots, AI and the  biotechno singularity — but the buzz is all about the latest crash of the world economy.

The trigger for all this change may have been what happened in Paris but could not stay in Paris. In December we reported from the United Nations climate meeting where many of these same characters — John Kerry, Leonardo DiCaprio, Justin Trudeau, Angela Merkel — were on stage. We described then how an amazing role reversal was in progress and how it had transformed COP-21, midway through the second week of deadlocked negotiations.

The roles that switched were between the dominants, like Exxon-Mobil, Shell and BP, and the submissives — the entire renewables industry. Renewables are largely a digital world, enjoying advancements in crystal structure, solid state controllers, neodymium and other rare earth metallurgy that follow the proscribed arc of Moore's law, doubling in efficiency and halving in cost at close intervals, driving exponential adoption and dissemination.

Fossils, in contrast, are an analog industry, trying to wring the last drops of intoxicating elixir from the carpet of the pub after closing time. In 2015 those two curves crossed, and renewables are now cheaper (even free at some hours for select consumers in certain markets) while coal, oil and gas are queuing up outside bankruptcy court.
 

Salvaging beer from the bar floor after last rounds

The US Department of Energy reported this week:
 

The Short-Term Energy Outlook (STEO) released on January 12 forecasts that Brent crude oil prices will average $40 per barrel (b) in 2016 and $50/b in 2017. This is the first STEO to include forecasts for 2017. Forecast West Texas Intermediate (WTI) crude oil prices average $2/b lower than Brent in 2016 and $3/b lower in 2017. However, the current values of futures and options contracts continue to suggest high uncertainty in the price outlook. For example, EIA's forecast for the average WTI price in April 2016 of $37/b should be considered in the context of recent contract values for April 2016 delivery, suggesting that the market expects WTI prices to range from $25/b to $56/b (at the 95% confidence interval).

The decline in oil price is too little, too late. It cannot keep pace with the price decline we are seeing in the clean tech revolution. Consequently, more people now work in the US solar industry than in oil and gas at the wellhead. In 2015, for the third straight year, the solar workforce grew 20 percent. Clean tech employs far more women than fossil, and 5 percent of the workforce is African American, 11 percent Latino, and 9 percent Asian/Pacific Islander.

At the same time, rear-guard action by the Coal-Baron-selected legislatures in Arizona and Nevada —  states that could be leading the nation in solar power production — have led to layoffs in the renewables sector. The pushback over solar and wind fees by grid owners, punitive taxes, and net metering promise to keep those states in the Dark Ages, as they did the United States for the past four decades.

In a famous L'il Abner cartoon, Pappy Yokum tells L'il Abner, "Any fool can knock down a barn, it takes a carpenter to build one." To which L'il Abner replies, "Any fool? Let me try!"

Listening to the Republican presidential candidates debate is like watching a Fox-den full of L'il Abners.
 

US Solar Power 2010-2015

So it is not surprising that at the stroke of a pen, three Republican appointees on the Nevada Power Utility Commission decided the fates of millions of ratepayers when they killed solar feed-in-tariffs in that state. It was not unlike Michigan governor Rick Snyder deciding to kill and maim thousands of Detroit residents by switching their water to a polluted source and then covering up the damage. You might say no-one gets killed or maimed from solar energy, and that's closer to true, but plenty more get poisoned every year from the fossil alternative.

The numbers being parsed in Davos will be puzzling to many attending that meeting. From a peak in January 2015 to last October, movements of crude by rail declined more than a fifth. The research group Genscape said rail deliveries to US Atlantic coast terminals continued to drop to the end of the year and the spot market for crude delivered by rail from North Dakota’s Bakken region “is at a near standstill.”

Just 5 years ago investors clamored for more tank cars to pick up the slack from overwhelmed pipeline capacity. Now those cars sit idle on sidings and no one is ordering more. Pipelines are idle too, as refineries on the coasts have found that it is cheaper to buy crude of higher quality than shale oil, shipped by ocean tanker from Canada, Nigeria and Azerbaijan.
 

Junk bond sales are all that supports
the fracked gas Ponzi scheme.

A Congress desperate to please its oil masters in an election year abolished four-decade-old restrictions on exporting domestic crude. While some tankers now take crude from the Gulf Coast to refineries in Venezuela, where the heavy sludges and half-formed keragens can be more economically processed because of fewer environmental restrictions, the US then imports back the finished products at a hefty mark-up.

The idling of rail, barge, ship and pipeline traffic is the biggest change of its kind in 30 years. And while the shift away from coal-powered energy, the long recession, and the petering out of the fracking and shale Ponzi real estate play would obviously lead to fewer tons, barrels and cubic feet being moved, it doesn't explain the full depth of the stoppage. The rail and barge slowdown is now spreading to more consumer-oriented segments. Intermodal carloads typically related to consumer goods fell 1.7 percent in the final quarter of last year.

"We believe rail data may be signaling a warning for the broader economy," the recent note from Bank of America says.
 

"Carloads have declined more than 5 percent in each of the past 11 weeks on a year-over-year basis. While one-off volume declines occur occasionally, they are generally followed by a recovery shortly thereafter. The current period of substantial and sustained weakness, including last week’s -10.1 percent decline, has not occurred since 2009."


“When people get hungry, governments fall” — Stuart Scott, Through A Dark Portal, Radio Ecoshock, January 13, 2016

If you can read the tea leaves, or even if you can't, we are now in the long slide. We will examine the financial road ahead, and the Paris Effect on that, in greater detail next week.

 

 

 

 

 

 

 

 

 

 

 

 

4 Responses to The Paris Gravity Well 1

  • Etyerepetyere says:

    Except all your solar and wind andwathnot so called renewables are kept on life support by government subsidies thus fossil fuel defibrillators no fossil fuels no renewable s and not just that they are unscalable intermittent and marginal . Just look at that Spanish-american solar going recently bankrupt . Before fossil fuels, renewable s will die since they will be cut of the tits of fossil fuel subsidy’s than the other way around however you want to tweak those / kilowatt production costs  it just wont add up ever 

  • Peaksurfer says:

    Etyerepeyere I would be curious to see your data. It may be true that in some countries, Denmark and Iceland for instance, renewables have received generous government aid. In more than 160 countries, and the US and Canada are certainly in that group, the subsidies for solar and wind have been less than annual car loan underwriting. Mostly they take the form of tax credits amounting to less than the fossil guys spend on canapes at receptions. Of course the past 5 years should disprove your assertion about scalability. Germany just introduced a wind turbine in a 40ft shipping container that will speed that even more. Intermittant? Only if looked at in isolation, like a single blade in a remote site. Wind farms that get up high are 24/7. If you build BOTH wind and PV together, they work together – one when it storms, the other when its sunny. But cloudy days are okay too. The concentrating arrays I demo'd at the Worlds Fair in 1981 made 3 suns on a cloudy day and cost less than unconcentrating types. You may need nightly storage, but that is not rocket science. Wind power in parts of Texas is so abundant it is free to consumers for 8 hours per night. I agree that you won't make steel with sunlight any time soon, and will be discussing that in my next post on Sunday. Next week I will be talking about the effect on all this that The Donald will have.

  • L Racine says:

    Sadly shaking my head….. 

    How about telling me about the externalized cost for the production of solar panels and other renewables.  I would like to know the dollar amount and the amount of Green House Gases produced in the mining of the rare earth mineral need. 

    "Renewables are largely a digital world, enjoying advancements in crystal structure, solid state controllers, neodymium and other rare earth metallurgy that follow the proscribed arc of Moore's law, doubling in efficiency and halving in cost at close intervals, driving exponential adoption and dissemination."

    I HATE having smoke blown up my ass… and this is putting a burn on my butt…. 

    Last I check the ineffiencies of PV systems have not changed very much…  Musk made some claims and sited a independent lab but in the real world his claims of a eff. on his panel of 21% are marginal at best (industry standard is around 20%… 1% WTF!!!!).  Hey you got to hand it to the guy…  he is a great salesman… 

     "Moore's law" is the observation that, over the history of computing hardware, the number of transistors in a dense integrated circuit has doubled approximately every two years.

    Moore's Law HAS NOTHING TO DO WITH efficiency!!!!  Computing power, yes…. EFFICIENCY NO!!!  Think inverter losses, line losses, solar panel ageing etc etc etc…

    And oh by the way having lived off grid for a few years I can tell you that the most vunerable part of the systems are the circuit boards…..

    This author is either not sincere or easily lead (mislead) and to damn lazy or STUPID to do his homework……

     

  • Etyerepetyere's Anus says:

    I apologise to readers on behalf of Etyerepetyere who suffers from a medical problem. His gut is back to front. He has shit for brains and craps through his mouth. He eats through his anus (that's me) so I'm better qualified to be his mouthpiece. Then again, what the hell do I know? I'm just an asshole.

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