The U.S. independent power companies and Investor Owned Utilities have installed more than 200,000 MW of natural gas fired electricity generating facilities. While some of these facilities were designed for providing “peaking” power supplies, many of them were designed for continuous operation. Using premium fuels for short duration operations is generally considered necessary, but using premium fuels for continuous operation is simply adding to the nation’s energy problems. A recent piece in television indicated that the current demand for oil was around 77 million barrels/day or about 28 billion barrels/year. A good portion of this oil is consumed in the U.S. but other economies are beginning to compete for the supplies. As an example, this television piece pointed out, if China’s economy moved forward to a level that was approximately on par with Mexico’s current economy, the world demand for oil would increase to 142 million barrels/day or about 52 billion barrels/year. While these estimates concentrated on the potential for consumption in China, they represent only one of many economies in the world that are expanding very rapidly.
Unfortunately the world wide for natural gas mirrors the demand for oil. The oil companies want to build more refineries as a solution to the supply side of the equation. More refineries mean more imports and more imports mean an increasing trade deficit. The same oil companies want to build LNG ports to supplement the existing natural gas supplies. Again, this direction simply increases the balance of trade problems. Both of these actions will further increase the competition for fuels and place additional upward pressure on pricing. The nation is debating the issue of “outsourcing” U.S. jobs. In fact, the oil industry may be the largest exporter of U.S. jobs. The U.S. spends billions of dollars on fuel each year. More than 60% of our fuel is imported to the U.S. from various nations. All of these dollars are providing jobs in other countries and not in the U.S. The argument can clearly be made that the fuel imports are necessary to meet demands and that there are no viable alternatives. The question must be asked, is it possible to produce additional domestic natural gas and crude oil? Or, is it possible to find a viable substitute for imported oil and natural gas that can substitute domestic jobs and production for dollars that are being sent off-shore. Part of the solution may be created by the production of ethanol and bio-diesel, providing a direct substitution for imported oil. Part of the solution may involve development of more remote oil reserves such as those in Alaska, along the east and west coastal areas and in the Gulf of Mexico. These opportunities represent a possible way to reverse the “Outsourcing” of U.S. jobs through substitution for U.S. based employment. Finally, the Nation is within 5 years of the beginning retirement of the “Baby Boomer” generation. Social Security, Medicare and Medicaid are already under severe pressures and will become bankrupt in the next 30 years unless something is done to make them viable – an indirect relation to energy. There are only three ways to make these programs viable:
With the increased price for natural gas the arguments against coal and nuclear are more difficult to sustain, with the exception for peaking generation requirements. Many environmental groups recognize that the price advantages to coal and nuclear are likely to move the market in that direction. Therefore, they rely heavily on the Not-In-My-Backyard (NIMBY) concept to prevent construction of these types of facilities. While it is true that many parts of the U.S. vehemently oppose construction of coal and nuclear plants, there are other areas that may be more receptive to their construction. Specifically, coal bearing areas might be very receptive to construction of mine mouth electricity generating stations that could provide large blocks of electricity to the grid. The environmental lobby understands this and therefore has taken a different direction in their opposition. In this case there is a strange bond between environmentalists, Investor Owned Utilities and the major railroads. These three groups, for completely different reasons create an opposition front to the development of mine mouth generation.
The IOUs want to maintain their market monopoly positions in their local markets. Therefore bringing in inexpensive electricity by wire is not necessarily in their interest. Obviously, if the IOU is the producer of the electricity it will favor the project, but otherwise it will object since it creates competition in their marketplace. The railroads want to see coal plants developed, but they object to mine mouth generation as a way to avoid the rail transportation of the coal. The environmentalists simply object because of the environmental aspect of the coal fired energy production. The way these groups object to coal and nuclear development is by objecting to major improvements in the Transmission System across the U.S. If a major “Direct Current” transmission system was developed it would allow large blocks of electricity to be moved from coast to coast with reasonable line losses. This would improve the overall efficiency of the electricity system, but it would also provide an “Interstate Electricity Highway” that would allow coal producing areas to cost effectively construct new major facilities and would avoid the NIMBY areas of the U.S.
What the environmentalists appear unwilling to recognize is that the development of a national “Interstate Electricity Highway” would also provide for the expansion of the Wind, Solar, Geothermal and Hydro-Electric industries.
Geothermal, as an example is generally located only in the western U.S. If a major transmission system was developed, all areas of the U.S. would benefit from the development of geothermal energy, thereby reducing some of the need for fossil generation.
Wind energy suffers from a lack of reliability. This factor could largely be eliminated through the construction of a major transmission system since wind project location diversity would provide an average amount of wind generated energy at all times.
This article is the first of a two part series. Part two will be released tomorrow.
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