It’s the Infrastructure, Stupid

Obama-Nation: Historic Win -- Now What on Energy?

Historic.  That's the word that most of the pundits used to describe it.  While I have my reservations about some of the issues and how the President Elect may deal with them, I agree that we have an exciting situation in the United States.  Biut closer to my heart is energy.  And what can we expect from the president elect and the vice president elect?

Lets review what they said during the campaign and you decide.  As for me -- I see HUGE hurdles, given the economy.  Many challanges remain in California and as to how we meld with the campaign promises and the realities that come -- well, lets wait and see...

What Does Barack Obama Say About Energy?

www.barackobama.com

ü      Reduce the Burden of Rising Gas Prices on Working Families

ü      Reduce Carbon Emissions 80 Percent by 2050

ü      Invest in a Clean Energy Future

ü      Support Next Generation Biofuels

ü      Set A

merica on Path to Oil Independence

ü      Improve Energy Efficiency 50 Percent by 2030

ü      Restore U.S. Leadership on Climate Change

Senator Joe Biden

The energy challenge take sacrifice and is a moral crusade. (Dec 2007)

FactCheck: Oil did not jump $18/bbl due to Iran Resolution. (Dec 2007)

Supports cap-and-trade for greenhouse gases. (Nov 2007)

Provide for emergency fuel assistance immediately. (Oct 2007)

Make every automobile sold be a flex-fuel automobile. (Apr 2007)

Voted YES on tax incentives for energy production and conservation. (Jun 2008)

Voted YES on addressing CO2 emissions without considering India & China. (May 2008)

Voted YES on removing oil & gas exploration subsidies. (Jun 2007)

Voted YES on factoring global warming into federal project planning. (May 2007)

Voted YES on disallowing an oil leasing program in Alaska's ANWR. (Nov 2005)

Voted YES on $3.1B for emergency oil assistance for hurricane-hit areas. (Oct 2005)

Voted YES on reducing oil usage by 40% by 2025 (instead of 5%). (Jun 2005)

Voted YES on banning drilling in the Arctic National Wildlife Refuge. (Mar 2005)

Voted YES on Bush Administration Energy Policy. (Jul 2003)

Voted YES on targeting 100,000 hydrogen-powered vehicles by 2010. (Jun 2003)

Voted YES on removing consideration of drilling ANWR from budget bill. (Mar 2003)

Voted NO on drilling ANWR on national security grounds. (Apr 2002)

Voted NO on terminating CAFE standards within 15 months. (Mar 2002)

Voted NO on preserving budget for ANWR oil drilling. (Apr 2000)

Voted NO on ending discussion of CAFE fuel efficiency standards. (Sep 1999)

Voted NO on defunding renewable and solar energy. (Jun 1999)

Voted NO on approving a nuclear waste repository. (Apr 1997)

Voted NO on do not require ethanol in gasoline. (Aug 1994)

Keep efficient air conditioner rule to conserve energy. (Mar 2004)

Establish greenhouse gas tradeable allowances. (Feb 2005)

Sponsored bill raising CAFE by a 4% per year until 2018. (Jul 2006)

Rated 83% by the CAF, indicating support for energy independence. (Dec 2006)

Designate sensitive ANWR area as protected wilderness. (Nov 2007)

So, What do Sarah and Joe Say About Energy?

While I will make no predictions on who ultimately wins the presidential election, I have been tracking where the candidates stand on energy matters.  Followin is where the vice presidential candidates stand on the matter.  And by the way, remember that the VP debate is tonight.  Here's what you can look out for on energy:

Governor Sarah Palin

Produce more of our own oil & gas, for national security. (Sep 2008)

Gas pipeline:history's largest private-sector infrastructure. (Sep 2008)

More pipelines; more nukes; more coal; more alternatives. (Sep 2008)

Claimed major triumph: $500 million subsidy for gas pipeline. (Aug 2008)

Global warming affects Alaska, but is not man-made. (Aug 2008)

Resource rebate: suspend AK 8-cent fuel tax for one year. (Aug 2008)

Gasline Inducement Act: 1,715-mile natural gas pipeline. (Aug 2008)

Commercialize Alaska's North Slope natural gas. (Aug 2008)

Appointed an Alaska oil and gas commissioner. (Aug 2008)

To win, GOP must push energy independence. (Aug 2008)

Agrees with Obama on more Alaska oil & gas production. (Aug 2008)

Windfall oil profits tax prevents investment. (Aug 2008)

Lift moratorium on offshore drilling. (Jul 2008)

Convinced McCain to drill offshore; not yet on drilling ANWR. (Jul 2008)

Exxon-Mobil should pay $507 million for Exxon Valdez spill. (Jul 2008)

Unlock ANWR; we're ready, willing and able to contribute. (Jun 2008)

Energy relief plan: $100 per person monthly, for oil & gas. (May 2008)

Bush is right: drill ANWR & develop our own supplies. (Apr 2008)

Fully fund for the Petroleum Systems Integrity Office. (Feb 2008)

$250M for proven alternative energy, including wind & hydro. (Jan 2008)

Gas pipelines are approved if they meet Alaska's needs. (Jan 2008)

National energy policy not an either/or proposition. (Nov 2007)

Fund cellulosic biofuel research in Farm Bill. (Oct 2007)

Submitted legislation to build natural AGIA gas pipeline. (Mar 2007)

Stranded Gas Development Act no longer applies. (Nov 2006)

Get ANWR open. (Nov 2006)

Chaired the Alaska Oil and Gas Conservation Commission. (Nov 2006)

Pursue gasline plan that is best for ALL Alaskans. (Nov 2006)

Met with producers and employee groups for pipeline deal. (Oct 2006)

Firm start date as part of gasline incentive offer. (Oct 2006)

Opposes natural gas reserves tax--it's not earned income yet. (Oct 2006)

Analyze potential costs associated with climate change. (Oct 2006)

Senator Joe Biden

The energy challenge take sacrifice and is a moral crusade. (Dec 2007)

FactCheck: Oil did not jump $18/bbl due to Iran Resolution. (Dec 2007)

Supports cap-and-trade for greenhouse gases. (Nov 2007)

Provide for emergency fuel assistance immediately. (Oct 2007)

Make every automobile sold be a flex-fuel automobile. (Apr 2007)

Voted YES on tax incentives for energy production and conservation. (Jun 2008)

Voted YES on addressing CO2 emissions without considering India & China. (May 2008)

Voted YES on removing oil & gas exploration subsidies. (Jun 2007)

Voted YES on factoring global warming into federal project planning. (May 2007)

Voted YES on disallowing an oil leasing program in Alaska's ANWR. (Nov 2005)

Voted YES on $3.1B for emergency oil assistance for hurricane-hit areas. (Oct 2005)

Voted YES on reducing oil usage by 40% by 2025 (instead of 5%). (Jun 2005)

Voted YES on banning drilling in the Arctic National Wildlife Refuge. (Mar 2005)

Voted YES on Bush Administration Energy Policy. (Jul 2003)

Voted YES on targeting 100,000 hydrogen-powered vehicles by 2010. (Jun 2003)

Voted YES on removing consideration of drilling ANWR from budget bill. (Mar 2003)

Voted NO on drilling ANWR on national security grounds. (Apr 2002)

Voted NO on terminating CAFE standards within 15 months. (Mar 2002)

Voted NO on preserving budget for ANWR oil drilling. (Apr 2000)

Voted NO on ending discussion of CAFE fuel efficiency standards. (Sep 1999)

Voted NO on defunding renewable and solar energy. (Jun 1999)

Voted NO on approving a nuclear waste repository. (Apr 1997)

Voted NO on do not require ethanol in gasoline. (Aug 1994)

Keep efficient air conditioner rule to conserve energy. (Mar 2004)

Establish greenhouse gas tradeable allowances. (Feb 2005)

Sponsored bill raising CAFE by a 4% per year until 2018. (Jul 2006)

Rated 83% by the CAF, indicating support for energy independence. (Dec 2006)

Designate sensitive ANWR area as protected wilderness. (Nov 2007)

I will give the edge to the Right Honorable Governor Palin on this issue.  What do you think?

McCain vs. Obama on Energy – Who Wins this Battle?

So, we have heard a lot from both of the presidential campaigns on energy this week, but have either of the candidates delivered knockout punches on the issue?  In my opinion, neither candidate has done that – but for now I would score the fight in favor of McCain, only because he is not loading up his plan with more spending.  Take a look for yourself, and make your decision.

 

What Does John McCain Say About Energy?

www.johnmccain.com

ü      Expanding Domestic Oil And Natural Gas Exploration And Production

ü      Taking Action Now To Break Our Dependency On Foreign Oil By Reforming Our Transportation Sector

ü      Investing In Clean, Alternative Sources Of Energy

ü      Protecting Our Environment And Addressing Climate Change: A Sound Energy Strategy Must Include A Solid Environmental Foundation

ü      Promoting Energy Efficiency

ü      Addressing Speculative Pricing Of Oil

ü      Does Not Support A Windfall Profits Tax

 

What Does Barack Obama Say About Energy?

www.barackobama.com

ü      Reduce the Burden of Rising Gas Prices on Working Families

ü      Reduce Carbon Emissions 80 Percent by 2050

ü      Invest in a Clean Energy Future

ü      Support Next Generation Biofuels

ü      Set America on Path to Oil Independence

ü      Improve Energy Efficiency 50 Percent by 2030

ü      Restore U.S. Leadership on Climate Change

Is ANWR Really the Answer to Lower Oil Prices?

If you heard President Bush or any of the media talking heads make pronouncements about drilling in ANWR to bring oil prices off of their historic highs, and you believed the rhetoric, you are not alone. If you have heard this debate over the past few years (President Bush actually raised this as a proposal 7 years ago), you are likely one of the few who might also remember that federal legislators quickly shot down the idea every time it came up.

So, could ANWR save the day on oil prices? Not immediately. Similar to the regulatory problems we face in California, even if you could drill in ANWR or anywhere off the West Coast of the United States, assuming no significant delays from the regulatory side or from environmental lawsuits, the conservative estimate of that oil actually hitting the market would be in roughly 7 to 10 years. Pretty sobering, eh?

There is plenty of blame to go around. Presidential candidates have talked about their views, but none have actually articulated a path to true independence from the body that actually has the strangle-hold on the world oil prices: OPEC.

Another parallel to California here in my humble opinion (think of the California effort to move to a green energy future). If we really want to build a bridge to a world of energy independence, we need to employ all the technologies that are working in other parts of the world. From bio-fuels that could come from sugar to nuclear power. If we are really going put our money where our mouth is, we are going to have to engage an Apollo like “race to the moon” type of effort to get us to the independence we claim to want. Are we serious about all of this? I hope so, but so far not one of the candidates is offering such a vision.

What would it take? New infrastructure on a massive scale. The kind that would revolutionize R&D for new fuels, the kind that would re-invent our entire transportation system, from our cars to public transportation. Failure to do so will soon result in only the very wealthy being able to afford something we take for granted today – like jumping on a flight to wherever for bargain prices.

The signs are there – the collapse of some major airlines around the world are due to the cost of fuel – that pass-through cost will soon result in a diminishing travel pool – and more airline collapses. I think this is just the thing that could dislocate world economies. I hope I am totally wrong.

In the meantime, remember that you read it here first: only a new way of thinking and new infrastructure will save the day.

Regulatory Malaise in California is Alive and Well

The California State Water Resources Control Board is scheduled to issue a scoping document today on a proposed regulation to restrict the use of ocean water for cooling power plants. On its face it is not something most people would ever really care about until you hear the emotional side of the argument: the use of ocean water for cooling power plants harms the ecology of the oceans, so we should stop this and figure out an alternative – like renewable energy. This is the environmentalist’s argument.

Like many emotional arguments, the claims are not supported by science. No surprise here, right? Well, try this on for size: 40% of the in state California generation comes from facilities which use ocean water for cooling and have been doing so since the 1940’s. Doesn’t that mean that the cumulative impact to the oceans has been severe? Consider that what we are talking about is a technical issue surrounding what is called “entrainment and impingement of marine life.” In English, the water that is sucked in by the facilities, also suck in plankton and ocean-going micro-organisms. These are in turn measured on an annual basis and thus the impact that a power facility is having can be determined.

At most power plants, the impacts are insignificant – especially when you consider the mitigation that is required to operate these facilities. Let me give you an idea of what we are talking about. At one facility, the total entrainment and impingement is about 700 pounds of fish and fish larvae on an annualized basis. Sounds like a lot, doesn’t it? Ever been to an aquarium – San Francisco, Monterey or Sea World? Any idea how much those aquariums “entrain and impinge?” Try this on for size: one adult harbor seal eats over 9500 pounds of fish per year. I am sure Shamu is putting a significant amount away too!

Don’t get me wrong, I am not for vanquishing the oceans of habitat or fish. But come on! Why does the state insist on creating more havoc where none needs to be created? The most irrational aspect of this charge to create a new regulation is that there is no one asking for this. There are no requirements on the books to impose something like this. Moreover, the charge by staff on this front ignores the collateral impacts that this will bring.

Assume that it were feasible to retrofit the existing fleet of facilities that rely on this technology. Here is what will result: more pollutants (carbon and carbon equivalents – about 2 million metric tons across California); greater consumption of natural gas (because of efficiency losses by moving to an air-cooled process); aggravated risk to reliability (because some of these facilities will not be able to retrofit – size and fiscal limitations at the sites will make the retrofit infeasible from an engineering point) and – ready for this – at a time when we are trying to improve access to renewable energy, this regulation will hurt the state’s ability to integrate renewables. The operational characteristics of these ocean water cooled facilities allow for the ramping ability that provides the necessary back-up to renewable generation which is intermittent.

The bottom line here is that the State Water Resources Control Board is urging a new regulation that will only harm the environment and cost all ratepayer classes millions of dollars when it is all said and done. Thanks for nothing.

Will Oil Hit $130 Per Barrel? CalPERS is Hoping it Does

Crude oil may reach a record $130 a barrel this year because pension funds are investing more in commodities, according to comments recently made by BlueGold Capital Management LLP, a hedge fund.

The outlook for oil over the next five years is also “bullish” as producers find it hard to replenish reserves, and demand outpaces supply. The major oil companies around the world have tapped the lower hanging fruit and are now finding it tougher to replace their findings, thus are drilling for harder-to-reach deposits while energy demand and crude prices surge to records. With commodities prices surging to all-time highs, the California Public Employees’ Retirement System (CalPERS), the largest U.S. pension fund, said it plans to boost investments.

CalPERS, which has about $240 billion in assets, agreed at its most recent board meeting to hold between 0.5 percent and 3 percent of its assets in commodities and last year put $450 million into commodities - its first such investment.

With crude oil trading above $100 a barrel, competition among producers to find untapped reserves has caused a worldwide shortage of rigs and crews.

Investors who are flocking to oil may be exacerbating the U.S. dollar’s plunge and pushing oil prices to new highs, according to the president of Cambridge Energy Research Associates (CERA). According to CERA, oil is now acting as a giant hedge fund against a weakening dollar.

The dollar touched a record low of $1.5395 per Euro last week as crude oil futures traded in New York surged to a historic close of $105.47. Add to this the worst U.S. housing market in more than a quarter of a century, fueled by $146 billion in losses by Wall Street banks, and a weakening economy and you produce the flight to oil which has been holding its value better than the greenback.

So, while CalPERS has talked about going green (as in being environmentally conscious) – the only real bets they are counting on are making more green (as in dollars backed by oil).

No Surprises on Sunrise: The Opposition is Still Emotional, but the Need for the Line is Real

I don't expect to see anything new this week as the hearings continue on the Sunrise Powerlink. None at all... I expect that the opposition will show up with their emotional arguments that are based mostly on emotion and very little on facts. I expect that the proponents will show up with sound and reasoned arguments. And while they may be vague on the exact route, the facts will be strong on the need to build this project.

In this blog, I have discussed my views on this project - do we need it? Most definitely. A growing part of the state should not have such a deficiency in transmission. Should all of the generation that the line is scheduled to potentially bring come from green resources? Ok, this point can be debated, but I say no. Why? Well, green is not totally dependable. You see ambient temperature drives wind, so when the days are hot - no wind. When the days are cloudy, no sun - ergo no solar energy.

On those days, you need to have dependable back-up generation that can start on a moments notice. This will be generation fueled by clean burning natural gas. SDG&E has been careful not to talk about this - I don't blame them. But I think they should. In so doing they could come clean with this issue and put it to rest. They might further state that they would secure that bit of generation (however much it is) through a competitive solicitation that will only consider state-of-the art generation - thus keeping the potential impact to the environment to a minimum. I am sure they will do just that at some point.

The realities are simple. The region is growing and a growing area has power needs that cannot be met by conservation alone - we the actual users have proven that we would rather not bake when the temperatures go up - and that we would rather not be inconvenienced by having to try to wake up to o laundry or any other energy intensive using task at 3 in the morning. No, we want our power when we want to use it and we don't want to hear excuses.

So, consider the following when you read the stories this week about the Sunrise Powerlink hearings: Want to be comfortable when it's hot? Want to do laundry and run the dishwasher and dryer or pool and spa whenever you want to? Stop complaining and support the Sunrise Powerlink. It's really that simple, the infrastructure is lacking, and we need to build it.

Support Your Local Powerline Project

There was an interesting piece by Duane Dichiara in the Flash Report yesterday (http://www.flashreport.org/blog.php?postID=2008022020060501) that spoke of the need for transmission in southern California. As I have commented in previous postings, I don’t see how we can achieve the GHG reduction goals that are mandated if we fail to secure the necessary transmission that the grid will need to allow for the delivery of the green energy.

So on one hand we have the environmentalist movement crying for more green and on the other, those same folks are fighting the very mechanisms that would allow for the delivery of what they are asking for!

Time for the NIMBYists to get in touch with reality – to Dichiara’s point about maybe they want to go back to the days of living by “candlelight” – candles emit carbon, so we can’t go there!

Energy Rate Shock: How Much Will Regulatory Delays Cost Ratepayers?

Over the past two years, the cost of energy infrastructure construction has risen dramatically. Several factors should be considered when looking at the root causes, but paramount in this phenomenon is the rising costs of fuel, steel, cement and regulatory delays.

Why have the costs skyrocketed? Well, as one of my friends put it, “Enter the Dragon.” China has engaged an amazingly robust period of energy infrastructure development, thus gobbling up materials on a dramatic scale. So much so, that the typical materials used for the industry are increasingly on aggressive delivery schedules headed for mainland China. With no regulatory controls in place (in China), construction and development of energy infrastructure is on a pace that is perhaps only comparable to what the United States experienced during the industrial revolution.

When I asked folks currently engaged in energy infrastructure development in California about their surging costs, what became patently clear was the fact that we too are competing in world market for these resources. The difference here is that we have to abide by significant regulatory control, thus putting this capital intensive development industry at a disadvantage when we compare to the rest of the world. Cambridge Energy Research Associates (CERA) has recently developed some modeling that shows the dramatic increase in costs to develop this infrastructure in the United States. Conclusions by their reports should worry al consumers. Other reports that are getting little attention also peg the run up in material costs (just since the energy crisis of 2000-2001) anywhere from 33 to 130 percent (depending on the technology). That will translate into a significant impact to all ratepayers.

Is there anything that we can do to curb this eventual shock to energy consumers? While we have a moral imperative to do what we can to protect the environment, it should be equally important to protect energy consumers from the coming rate shock as much as possible and not create unnecessary regulatory burdens that compound costs. A regulatory process that moves at glacial speed is dangerous on many fronts – and the bottom line is that the ratepayer will always bear the cost of those delays.

What Are the Top Presidential Candidates Saying About Energy?

If you are still working on your presidential ballot and want to consider what the candidates are saying about energy -- I looked at the top condidates for the both the Republican and Democratic parties and following are what they see as the top energy priorities:

REPUBLICANS

John McCain

• Supports mandatory cap-and-trade measures (which would cap greenhouse gas emissions and let companies trade emissions allowances)
• Supports increasing fuel-efficiency standards
• Supports nuclear power
• Opposes opening Arctic National Wildlife Refuge to oil and gas exploration

Mitt Romney

• Believes carbon emission reductions must be enacted globally
• Supports making energy independence a top administration priority
• Supports increasing federal spending on energy-related research
• Supports accelerating construction of nuclear power plants
• Supports increasing domestic production, including opening Arctic National Wildlife Refuge to oil and gas development

DEMOCRATS

Barack Obama

• Supports market-based cap-and-trade system to reduce carbon emissions 80% below 1990 levels by 2050
• Supports investing $150 billion over 10 years in "clean" energy sources
• Supports requiring that 25% of electricity be generated by renewable energy sources by 2025
• Supports doubling fuel-efficiency standards by 2026

Hillary Rodham Clinton

• Supports cap-and-trade program to reduce greenhouse gas emissions 80% below 1990 levels by 2050
• Supports 10-year, $150-billion energy package, including $50-billion Strategic Energy Fund to develop alternative energy sources
• Supports increasing fuel-efficiency standards to 55 mpg by 2030
• Supports a transition to renewable-energy sources, with a goal of generating 25% of electricity by 2025

Not surprising, both parties are in favor of a GHG cap -- and equally not surprising -- both parties will support new technologies and "greener" energy.  The question none of them tackle is how that new generation will reach the consumer?  I suppose it will be a challange that the eventual winner will have to help solve.  In the meantime "green" is great, but making green available at your light-switch will be a matter solved only by new transmission.  Hopefully our candidates will soon understand that.