RealClearEnergy Charticles

China Smells Like A Rose

Editors - October 25, 2016

The venerable International Energy Agency has just issued its "Medium-Term Renewable Energy Market Report" and there are some interesting findings.

First the headline, "Renewable energy reached an important turning point last year with record new installations of emissions-free power surpassing sources that burn fossil fuel."

Then they tell us which countries are driving this conversion and that's interesting as well:

China is currently stuck with an image of the globe's pollution villain. (Just look at those photos of smog-bound Beijing), but in terms of the effort the country appears to be making to convert from fossils, the country actually comes out smelling like a rose -- and not like diesel exhaust -- in this report.

U.S. Shale Unleashed

Editors - October 20, 2016

Renewables: Give It To Me Straight, Doc

Editors - October 19, 2016

It is hard to find an even-handed article on the politically-charged subject of "renewable energy" when even the term "renewable energy" is politically loaded.

All one can be sure of when one starts reading a piece purportedly on renewables is that the discussion will be about low carbon sources.

After that, who knows. Just wind and solar? What about bio-mass? How about hydropower? Is that politically correct yet? (Water seems innocent enough yet dams were seen as arch villains in early days of the environmental movement.)

And then there's the real third rail subject, nuclear energy. Of course, nuclear is low carbon and certainly it's renewable -- plenty of atoms in the world and they're not going anywhere. But to include bad ol' nuclear in the pantheon of bonafide "renewable" sources? Psssshhhhhh....doubtful.

Saudis: Just Buy Our Bonds, Awright?

Editors - October 18, 2016

There's a dramatic story today from Bloomberg which could be subtitled "Just Buy Our ^&^*&^ Bonds!" The article provides a snapshot of a Saudi delegation in London meeting "with prospective investors ahead of the kingdom’s first-ever international bond sale."

"The world’s largest oil exporter wants to raise at least $10 billion this week from bonds due in five, 10 and 30 years, people familiar with the plans have said," Bloomberg reports.

"That they are having to tap the market at all is testament to how far their finances have deteriorated. The budget deficit has swollen to the widest in more than two decades and the government has eaten into foreign currency reserves and been forced to raise about $63 billion from local bond sales. The state is cutting spending and salaries as part of Saudi Deputy Crown Prince Mohammed bin Salman’s unprecedented overhaul, which also includes a planned initial public offering of oil giant Saudi Aramco."

Apparently, the delegation was happy to talk bonds but got snappish when queried about the direction of oil prices and the financial burden of the war with Yemen. According to Bloomberg, one would-be investor groused that "The fact that they refused to take questions on oil prices or how much is achievable on budget rationalization have left investors with half a picture."

Are We Nearing Peak Demand?

Editors - October 17, 2016

Ten years ago if you wanted to worry about something you worried about "Peak Oil," the idea that the planet only had so much and when we ran out....all Hell would break loose.

How times change. Bloomberg suggests that we now worry about...Peak Demand:

"OPEC’s decision last month to reverse its policy of unfettered production and cut oil output to boost prices may be at odds with the industry’s most important long-term trend: demand for what they produce could start falling within 15 years.

"If rapid improvements continue in renewable energy, electric vehicles and other disruptive technologies, petroleum consumption will peak in 2030 and decline thereafter, according to a report from the World Energy Council. As the globe’s largest producers gather in London this week for the Oil and Money conference, they might want to check their assumption that the market will grow for decades to come."

Energy Independence: Fact-Checking Hillary

Editors - October 14, 2016

"Energy Independence." The phrase has a nice ring to it, a bloody lovely ring to it if you were around in the 70s and experienced the Arab Oil Embargo. Hillary Clinton must understand the positive associations contained in those two little words for she deployed them towards the end of the last presidential debate when she declared “We are now for the first time ever energy-independent.”

Energy Collective's Geoffrey Styles fact-checks Clinton and concludes that "although the US is certainly in a better overall position than it has been in decades, with progress on multiple aspects of energy, it is not yet energy independent..."

The largest gains in progress toward energy independence have been due to fracking, Styles writes, a technology which Mrs. Clinton promises to restrict. If Mrs. Clinton likes energy independence, as she seems to, she should be aware, Styles suggests that "her proposals are unlikely to deliver it in the foreseeable future–or preserve our present, hard-won reduced dependence on foreign energy sources."

"Anyone who doubts that this is a pocketbook issue should recall where oil and gasoline prices were just three years ago, before US shale added over 4 million barrels per day to global oil supplies."

It's All About the Battery

Editors - October 12, 2016

The general public (defined as those who don't read energy news because they think electricity lives somewhere inside their apartment wall) doesn't know it yet, and probably never will, but batteries are one hot (no pun intended, Samsung) topic.

It should be no secret by now (even to the notoriously sluggish general public) that Samsung has been forced to completely kill its entire Galaxy 7 cell phone line because the built-in lithium-ion batteries kept exploding.

Our lives depend on batteries.  If you lived through Hurricaine Sandy and wandered the aisles of a supermarket ready to offer $100 to the first person who could slip you a stash of "D"s you know this, otherwise -- and if you didn't own a Galaxy 7 -- you probably don't.

The wind and solar energy industries, for example, are essentially in a kind of holding mode until a battery is developed that can store their energy to be used in the fallow periods when the sun isn't shining and the wind isn't blowing.  Until then they kind of limp along letting natural gas fill in for them at night, during storms and when they're just feeling to weak to get to work.

'A Thing Called Clean Coal'

Editors - October 11, 2016

"Yeah, and there's a thing called a unicorn," a cynic might reply. Donald Trump has a habit of making his energy prescriptions sound easy. "We shoulda just taken the oil," comes to mind.

In the most recent debate against Hillary Clinton, Candidate Trump took on energy issues and, though correct in a broad sense on many of them, once again showed he could be oblivious to details. And we all know about details: That's where the devil resides.

Trump was correct to point out that America's coal industry is dying. There's no other way to say it. But who killed it, and how, and when is a more complicated matter.

It's always emotionally satisfying to find a villain. Enter President Obama with his pledge in 2008 to bankrupt the coal industry and his Clean Power Plan that has made life miserable, if not impossible, in America's coal country.

IEA Awards Good Grades For Efficiency

Editors - October 10, 2016

A most interesting phenomenon: By one measure, mankind is doing the right thing -- despite a large temptation to do the wrong thing.

The right thing is energy efficiency, getting more from less. "Energy intensity," which is what the IEA calls this measurement of "fuel consumed per unit of gross domestic product" fell 1.8 percent last year, triple the average rate over the past decade and more than the 1.5 percent reduction in 2014.... Investment in efficiency measures totaled $221 billion last year, about 66 percent more than was spent on building conventional power generation," according to Bloomberg.

And the efficiency thing is all the more curious because it's happening in the middle of a oil glut. There's just more than anybody knows what to do with.

It's lanquishing in holding tanks, underground bunkers and tankers at sea all over the globe.

The Aramco IPO? It's Still Coming

Editors - October 7, 2016

"You didn't forget, did you?" seems to be the message of a blitz of news articles this morning about Saudi Arabia's forthcoming initial public offering in its state-owned oil company, Aramco.

The IPO is not planned until sometime in 2018 but the Saudis released some important details today and they were picked up by seemingly any and every financial news outlet.

The details pertain to which exchange will handle the IPO, which parts of the company will be included and what sorts of financial records will be available for scrutiny beforehand.

And, yes, though it seems a long way away, there's certainly reason to anticipate: As The Street reminds us, "It will be the biggest IPO the markets have ever seen."

Saudi Growth Sputters

Editors - October 6, 2016

Deputy Crown Prince Mohammed Bin Salman, all of 31-years-old and now the de facto CEO of Saudi Arabia, Inc. has a task ahead of him that's like threading a needle.

He's the guy who always seems to be brimming with confidence about taking the kingdom into its post-oil future. (There has to be a post-oil future because it's unlikely the world will go back to $100BBL anytime soon.)

But a new Saudi Arabia selling new products isn't going to arrive overnight. Meanwhile MBS (as he is nicknamed) must manage a population suckled on state largesse derived from oil.

As Bloomberg puts it: "Austerity [cuts to state workers' salaries and the like] will help Saudis reduce a budget deficit that reached 16 percent of gross domestic product last year. But it will also likely exacerbate the economic slowdown as consumption falls."

Massive Outage Puts Wind In Crosshairs

Editors - October 5, 2016

Much of the Northern Hemisphere was blissfully unaware but the state of South Australia suffered through a massive blackout last week. Like previous disasters and energy source failures (Japan's Fukushima disaster comes to mind), the grid collapse was precipitated by unusually severe weather which perhaps no grid could have endured. According to Australia's Bureau of Meteorology, for instance, the storm was "a once in 50-year event"; the region was lashed by gale force winds, at least two tornadoes and at least 80,000 lightning strikes. The region's steel industry is still counting its losses.

An authoritative report is still a long way away, but because renewable energy makes up 41 per cent of South Australia's power mix, the focus on the failures of wind turbines immediately before everything else went down has been intense.

As Clean Technica puts it: "[P]oliticians from around Australia jumped on the news of the power outage to place the blame squarely on South Australia’s renewable energy industry — the state leading the way in Australia as the largest consumer of renewable energy. Despite immediate reports to the contrary from utilities and operators, front-page headlines furthered the narrative that renewable energy was to blame.

While South Australia has an impressive level of renewable energy, specifically wind energy, supplying electricity to the grid, it nevertheless includes an interconnector from neighbouring Victoria supplying coal-generated electricity which can be tapped in the event of lower levels of renewable energy generation. Knowledge of this interconnector raised eyebrows for as politicians right up to, and including the country’s Energy Minister Josh Frydenberg and Prime Minister Malcolm Turnbull blamed renewable energy for the blackout."

UK: Beguiled By Cheap Wind

Editors - October 3, 2016

The wind farms of the Oklahoma plains may look serene when you see them at a distance from the highway, backlit by the setting sun.  As you watch the mammoth blades turn in that deliberate, stately way you might never guess at all the dramas percolating behind the scenes in the wind industry.

Some of those dramas are technical. Here's a really big one: Was last week's devastating grid outage in Southern Australia caused by poorly integrated wind energy as many, including Australia's PM insist?

And some, as sketched out here by Daily Telegraph economics columnist Ambrose Evans-Pritchard, are economic.

Evans-Pritchard describes European waters that are in a wind energy buildout frenzy primarily caused by newly cheap costs: "For years the complaint against offshore wind was prohibitive cost. The new worry is that it is suddenly becoming too beguilingly cheap....The world’s biggest wind companies are driving down power contracts so fast in their coat-throat [sic] battle for market share that they may be making impossible commitments. The sums of money at play are huge, and the stresses may not come to light until the financial cycle turns. "

Ontario Suspends Renewables

Editors - September 28, 2016

Is the province of Ontario's decision to suspend procurement of wind and solar energy an "about a disastrous green energy program" or simply a pause for retooling? Only time will tell.

The province has attempted to put a bright spin on the move by declaring that the cancellation is “expected to save $3.8 billion in electricity system costs,” thereby saving a typical residential consumer “an average of approximately $2.45 per month.”

"Only a government can get away with declaring a saving for consumers by not spending on projects that are not needed," notes Terence Corcoran of Canada's Financial Post.

Frackers Gotta Frack

Editors - September 27, 2016

We're still here. It could be the slogan of the US shale patch. The "brutal culling" predicted in 2014 when Saudi Arabia appeared to be trying to eliminate competition by flooding the market has not happened, the Wall Street Journal reports.

Yes, there have been bankruptcies and layoffs, but the US shale patch hunkered down, got more efficient, reduced its break-even price and is weathering the storm.

Meanwhile Saudi Arabia's showing some battle fatigue. The long-rumored cuts to government workers' salaries were announced today and the New York Times calls them "drastic."  It's all part of the Kingdom's new austerity plan as it struggles to cope with the results of its self-imposed attrition warfare.

And those frackers will have plenty of demand for the time being. According to UPI, "the American Petroleum Institute reported August total petroleum deliveries, a measure of demand, were at their highest level in nine years. Gasoline deliveries in August were their highest on record."