Energy & Power Generation

Power Myths and the Onion

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THE ONION

I am a long time fan of the Onion… although they traffic in humor, sometimes they really nail an issue right on the head. A recent (fake) article was a post by British Petroleum’s (BP) CEO is called “We’re Investing So Much In Alternative Fuels, Sometimes We Almost Forget to Pump Oil!” The article is tongue in cheek as the CEO extols all the work that they have done on publicity and various stunts while just rolling in cash from good ol’ traditional fossil fuels.

“Wow. So why exactly are people still buying gas, when all the cars in the United States are powered by electric batteries by now? They’re not? What?! You’re pulling my leg, right? Surely we’re not still relying on that dinosaur technology after all the effort we’ve put into alternative energy sources and forging an inoffensive corporate identity that reflects a new consciousness of global responsibility. Are we?

Man alive! I’m going to write this down in my planner right now, so I don’t forget to do it later when I’m all caught up in a discussion about wind power and how to maintain the delicate balance of our beautiful, precious ecosystem. “Still pumping oil, question mark.” Well, I’ll look into it, if there’s even anyone left in this multinational corporate headquarters who’s still following that branch of the business.

Wait—the price of oil is what? Over $4 a gallon? No way! Say, we must be making a fortune, huh? How the heck did that happen? Holy cow: Now that I’m looking over these annual revenue figures for the first time, I see that while I was doing all those other things, we made a couple hundred billion bucks!”

COMED AND ILLINOIS

ComEd, the electricity distribution company for Illinois that is a wholly-owned subsidiary of the massively profitable Exelon, sends out an environmental disclosure statement in your monthly bill. The statement shows just how much progress has been made overall towards getting off fossil fuels (and nuclear power).

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Pickens: Wind + Natural Gas

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Today at 10:00 EDT, the oilman / corporate raider T Boone Pickens will hold a press conference to launch his plan (humbly entitled “the Pickens Plan”) for sharply reducing the American demand for imported oil. The address of the webcast is at the link.

Here is the Pickens Plan website, and here’s a USA Today article on the plan.

In a nutshell, the idea is:

1)Heavy use of wind power-much of it to be produced in massive wind farms–to generate electricity. This would free up large amounts of natural gas, which is now a primary fuel for electrical generation.
2)Shift a substantial portion of America’s car and truck fleet to run on natural gas, which would of course become relatively cheaper if it were less in demand for power generation.

Let’s discuss.

The Age of Unreliability – And the Alternatives of the Elite

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CAPACITY AND RELIABILITY – THE AIRLINES

One of the oldest lines goes something like “predictions are often wrong, especially if they are about the future”. I thought about this line recently when I had an American Airlines flight from Washington DC to Chicago on a Sunday afternoon. We had just arrived at the airport when the gate agent just said that there was bad weather at O’Hare and they canceled all flights into Chicago.

In a past life as a consultant I flew literally hundreds of times and I know a bit about airports and airlines. In past eras, the airline would have continually postponed the flight, helped you with alternatives, and bravely kept chugging along, trying to get you to your destination. Nowadays, with current fuel prices and most airlines on the brink of bankruptcy, the equation has changed; the airline that you select is basically on price or your Frequent Flyer mile affiliation, and the airlines are returning the favor – they are cutting flights, packing flights full to the brim, and basically stripping all the excess capacity out of the system.

The more subtle outcome of this is that airlines have become a significantly less reliable way of getting you from place A to place B. Cruises are now telling passengers that they ought to arrive the day before the cruise; it is too risky to fly out the morning of your cruise because so many flights are delayed that you might miss your departure. When I go on vacations, I often leave a day in front and a day in back just for these sorts of situations; a significant percentage of my recent trips were like the one to Washington DC when an extra day (or 8+ hours late at arrival) was inadvertently tacked on to my return.

The airline is basically substituting my personal time (which has a cost, especially if it is a day of work lost or vacation day) and my stress level (it is stressful not knowing whether you are going to get home that day to meet commitments or arrive at the start of your trip) for their financial survival. Flying on a plane nowadays is significantly more of a crap-shoot in terms of reliability and cancellation than it was in the past, and just try to fly stand-by if your flight is canceled when all of the subsequent fights are packed to the gills – that is even more stressful.

The parallels between airlines and electric power are actually very great, although this seems odd at first. For many years the airlines were focused on reliability and services beyond just the lowest price; they didn’t fill every flight to the absolute brim and they had spare planes available in case of weather emergencies or mechanical issues. This extra level of investment helped service in many subtle ways, but cost money – money tied up in airplanes that weren’t flying, ground crew to help with your experience, and in space in their schedule to re-jigger flights if needed.

Airlines and power have another subtle similarity – they are both services dependent upon time. The price of power famously varies depending on the time of day and weather conditions; this is due to the fact that you don’t want power “as a service” when it is best for the power company, you want it when it is best for YOU. If it is a hot day, you want air conditioning at noon. If you are running a company, you want power while the machines are running. The airlines aren’t just offering to fly me from A to B at a price; they are also balancing my time into the equation. If I have a funeral to attend, I want reliability, not price. If I have to make a critical overseas connection, I need to be in the right airport at the right time. While the airlines are competing on price, they are dropping so much capacity from the system (spare machines, spare people, room in schedule) that they are trading off between the two in a way that is significant and growing.

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Quotes of the Day

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America must get to work producing more energy. The Republican program for solving economic problems is based on growth and productivity.
 
Large amounts of oil and natural gas lay beneath our land and off our shores, untouched, because the present administration seems to believe the American people would rather see more regulation, more taxes and more controls than more energy.
 
Coal offers great potential. So does nuclear energy produced under rigorous safety standards. It could supply electricity for thousands of industries and millions of jobs and homes. It must not be thwarted by a tiny minority opposed to economic growth which often finds friendly ears in regulatory agencies for its obstructionist campaigns.
 
Make no mistake. We will not permit the safety of our people or our environment heritage to be jeopardized, but we are going to reaffirm that the economic prosperity of our people is a fundamental part of our environment.

Ronald Reagan, via Larry Kudlow. I miss Reagan. How come no one talks like this? How the Hell hard is it?

And I have to ask lawmakers in Washington, DC, who have prohibited this drilling in ANWR if they’re doing all they can to secure the United States. When you consider, too, the geology that we’re talking about here, and the physical space that’s even needed to drill now, about a 2,000 acre plot, because of directional drilling and new technology, allowing such a small footprint to even be placed upon the tundra up north, it’s about 2,000 acres, which is smaller than the size of LAX and other big-city airports, that we would need to drill, and allow these resources to finally be tapped and to flow into hungry markets, and make us more secure. I think it’s so short-sighted.

Sarah Palin, quoted here.

I like Palin. I hope we see her as McCain’s VP. We need something to arrest the downward trend, though I really see no way McCain can win. But Palin for VP would help, and would position the GOP to have a conservative woman run in 2112. That might be enough to drive BHO out after one term.

UPDATE: Instapundit links to a Gallup poll supposedly showing McCain and Obama tied at 45%. But Intrade shows them 31 points apart. Hmmm, indeed. Which is more reliable, a crowd of people with money on the table, or a bunch of people answering a pollster’s questions?

Not Getting It… On Expropriation

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In my life one lesson I learned is that there are three kinds of people:

1) those you trust

2) those you don’t trust

3) and those you can trust to f*ck you over

The WSJ, which is generally a fine publication, often is tripped up by the fact that their journalists are often myopic and even when they get the story right, they often miss the overall context. From the June 6 issue, here are two articles back to back, both good articles, but quite ironically placed.

The lower article is titled “Kremlin Seeks TNK-BP Detente”. British Petroleum (BP) is part of “a 50-50 venture with a group of Russian billionaires that is Russia’s No. 3 oil producer.” Per the article:

“People close to BP charge the Russians with trying to take effective control over the venture through pressure tactics, possibly ahead of a sale to a state-controlled company such as OAO Gazprom.”

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