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Cheaper Energy Is Not Always Better Energy

Cheaper Energy Is Not Always Better Energy

The market is a wondrous place. It ensures you can drink Scotch whisky in Cape Town and Moscow, or Washington and Tokyo, if you prefer. It distributes goods and services superbly, and it can't be improved upon in seeking efficiency.

But it can’t think and it can’t plan, and it’s a cruel exterminator of the weak or the unready or, for that matter, the future.

Yet there are those who believe that the market has wisdom as well as efficiency. Not so.

If it were wise, or forward-looking, or sensitive, Mozart wouldn’t have died a pauper, and one of the greatest -- if not the greatest architecturally -- railway station ever built, Penn Station, wouldn't have been demolished in 1963 to make way for the profit that could be squeezed out of the architectural deformity that replaced it: the Madison Square Garden/Penn Station horror in New York City.

Around Washington, Los Angeles and other cities are the traces of the tracks of the railroads and streetcar lines of yore. These were torn up when the market anointed the automobile as the uber-urban transport of the future.

Related: Why Oil Price Predictions Are Always Off

As Washington and Los Angeles drown in traffic, many wish the tracks -- now mostly bike paths -- were still there to carry the commuter trains and streetcars that are so badly needed in the most traffic-clogged cities.

Now the market, with its concentration on the present tense, is about to do another great mischief to the future. An abundance of natural gas is sending the market signals, which threaten carbon-free nuclear plants before their life is run out and before a time when nuclear electricity will again be cheaper than gas-generated electricity. World commodity prices are depressed at present, and no one believes that gas will always be the bargain it is today.

Two nuclear plants, Vermont Yankee in Vernon, Vt. and Kewaunee in Carlton, Wis., have already been shuttered, and three plants on the Exelon Corp. system in the Midwest are in jeopardy. They’ve won a temporary reprieve because the Federal Energy Regulatory Commission says the fact that they have round-the-clock reliability has to be taken into account against wind and solar, which don’t. In a twist, solar and wind have saved some nuclear for the while.

Related: Is This The Next Great Threat To The Oil Industry?

Natural gas, the market distorting fuel of the moment, is a greenhouse gas producer, although less so than coal. Gas however could, in the final analysis, be as bad, or worse, than coal when you take into account the habitual losses of the stuff during extraction. Natural gas is almost pure methane and when this gets into the atmosphere, it’s a serious climate pollutant, maybe more so than carbon dioxide, which results when it is burned.

Taken together, methane leaks with the carbon dioxide emissions, and natural gas looks less and less environmentally friendly.

Whatever is said about nuclear, it is the “Big Green” when it comes to the air. Unlike solar and wind, it is available 24 hours a day, which is why three Midwest plants got their temporary reprieve by the Federal Energy Regulatory Commission in August. Related: “Walking” Oil Rigs Can Make Drilling Faster, Cheaper, Safer

When President Obama goes to Paris in December to plead with the world for action on climate change, the market will be undercutting him at home as more and more electricity is being generated by natural gas for no better reason than it is cheap.

As with buying clothes or building lumber, the cost of cheap is very high. The market says, “gas, gas, gas" because it is cheap – now. The market is not responsible for the price tomorrow, or for the non-economic costs like climate change.

But if you want a lot of electricity that disturbs very little of the world’s surface and doesn’t put any carbon or methane into the air, the answer is nuclear: big, green nuclear.

By Llewellyn King for Oilprice.com

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  • jeff on September 26 2015 said:
    The author claims there is other reason for natural gas than it is cheap. Actually, a very good reason is because it leads to greenhouse gas emissions reductions. In practice it has been effective in the US than solar and wind in Germany. The result of Germany's energiewende is increased emissions. The result of the US fracking revolution is huge reductions in emissions. And our strategy cost far far less to consumers.
  • R. L. Hails Sr. P. E. (ret.) on September 26 2015 said:
    An insightful article. Cheap is not the best. The correct concept is lowest evaluated cost with the concurrent acceptance of risk.

    Eisenhower, a man responsible for uncounted killings, summarized the conundrum of atomic power: Mankind will either use this technology for peace, or it will annihilate us all. Since he created Atoms for Peace, his nation has spent 99.999 % of the money on uranium fission in melting cities. The US NRC took a technology with the promise of free energy, so cheap the house meter cost more than a life time of juice, and priced it out of the market, by larding on costs. They killed the industry, not due to safety, due to cost.

    The great loss to our nation was the destruction of two generations of experienced technical veterans in this complex technology. At one last survey, 69 US engineering colleges had dropped the vital coursework by 1991. Our experts lie in graves. Most of the experts, above the grass, now live in China.

    US energy policies are formed by late night comedians and buxom actresses with low cut dresses. A dull looking guy like Einstein would never be invited to the show.

    There is a price for this stupidity; it is not cheap.
  • Jim on September 24 2015 said:
    I am a bicycle commuter (my wife takes the bus). However, most of the US is not suitable for bicycle commuting much of the year, unlike most of Europe - which sits at a northern latitude but insulated by surrounding seas. We can pair existing gas and nuclear plants with wind and solar generation to add capacity to the system and help mature renewable technologies. The legal infrastructure to support a better grid is key to long-term development of sustainable energy policies and infrastructure. More tendentious hot air only adds to global warming.

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