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Like it or Not, U.S. Will Soon Become a Natural Gas Exporter

Natural Gas Power Plant

The U.S. is producing more natural gas than we can use. Many energy companies are now seeking permission to export the nation’s new found bounty to other countries.

The revolution in drilling technology that has made fracking a household word has changed the American energy policy discussion. Just a few years ago the focus was on dwindling fossil fuels reserves. Now the U.S is debating what to do with all this extra natural gas we have laying around. According to the Associated Press, up to 40% of the U.S. production of liquefied natural gas (LNG) could be exported if all of the current energy company export requests are approved by the government.

There are two dimensions to the debate: environmental impact and economic impact.

Natural Gas Fracking: Environmental Friend or Foe?

The use of hydraulic fracturing has been the subject of intense debate focusing on ground water contamination, earthquakes, and methane release. Proponents point out that the increased use of natural gas has helped to curb growth in CO2 emissions. As natural gas increasingly becomes the fuel of choice for producing electricity, it is largely replacing coal resulting in a net win in terms of carbon dioxide emissions.

Critics had countered this by pointing out that natural gas drilling operations often result in large unintentional releases of methane into the atmosphere. As a greenhouse gas, methane is several times more powerful than CO2. This could in theory more than offset any gains made by reducing the carbon footprint of electricity generating fossil fuels.

The methane argument recently lost some clout as the EPA itself dramatically lowered its estimates of the amount of methane leaked by modern natural gas drilling operations.  The new data shows that new technologies deployed to reduce methane leaks have resulted in less methane release even as natural gas production has grown considerably.

From an environmental perspective, the impact of increased natural gas production is laudable or regrettable depending on which side of the argument you already fall on. If you feel that increased use of natural gas comes at the expense of other less clean fossil fuels such as coal then it would be seen as a win.

If you fall in the camp that feels every kilowatt of electricity produced by natural gas is a missed opportunity to deploy a renewable energy technology such as solar or wind then you are not too enthusiastic about the prospect of seeing tankers laden with U.S produced liquefied natural gas heading toward foreign ports.

Economic Impact of Exporting Natural Gas

Potential environmental issues aside, it’s hard to deny the potential economic benefits of the U.S. becoming a natural gas exporter. The glut of natural gas production in the U.S has brought prices down so low its getting harder for producers to make a profit. Other parts of the world, on the other hand, are seeing higher prices for natural gas. Energy companies are eager to exploit this.

Undoubtedly, the loss of this supply to the domestic market would affect energy prices in the U.S. This raises the question of whether the economic benefit of increased tax revenue, employment, and, yes, energy company profits would offset the detrimental impacts of higher energy costs.

To begin with, natural gas production has leveled off lately not because there is a shortage of product in the ground but because low prices remove incentive for increased production. Throwing foreign markets into the demand mix might not dramatically impact prices if supply can easily be increased by ramping up production.

The Department of Energy must approve requests to export LNG. To that end, the Department commissioned a detailed study conducted by a third party consulting group named NERA Economic Consulting. NERA used sophisticated modeling techniques to look at various scenarios taking into account a range of possible values for prices, domestic output and foreign demand. The results, laid out in excruciating detail in the 230 page report, point to natural gas exporting being an economically positive outcome for the U.S.  The study concludes that the positive effects increase with assumptions of greater levels of export.

“Across all these scenarios, the U.S. was projected to gain net economic benefits from allowing LNG exports. Moreover, for every one of the market scenarios examined, net economic benefits increased as the level of LNG exports increased. In particular, scenarios with unlimited exports always had higher net economic benefits than corresponding cases with limited exports.

In all of these cases, benefits that come from export expansion more than outweigh the losses from reduced capital and wage income to U.S. consumers, and hence LNG exports have net economic benefits in spite of higher domestic natural gas prices. This is exactly the outcome that economic theory describes when barriers to trade are removed.”

Much like the environmental debate, the two camps on the economic debate are defined by their own entrenched interests. Manufactures and those who have an interest in continued low energy prices don’t want to see anything happen that will result in higher prices. Exporting LNG will certainly do that. This won’t be felt just by large manufactures. Anyone who uses electricity will see their rates go up since natural gas prices are a driver of electricity rates; especially in deregulated areas such as Texas.

Those who stand to benefit from the windfall that could be realized by selling U.S. LNG to overseas markets are likely to win the day, however. Ultimately, there is too much money on the table and too much political pressure.
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Len Gould's picture
Len Gould on Jun 27, 2013 6:00 pm GMT
" Anyone who uses electricity will see their rates go up" -- "Ultimately, there is too much money on the table and too much political pressure." So our politicians and investor community, having told us that it made economic sense to ship all manufacturing jobs overseas because production costs here were too high, now want to take steps to ensure that any local manufacturing cost advantage which we may be left with should also be shipped overseas. Hmmm, I guess that's clear enough.
Ferdinand E. Banks's picture
Ferdinand E. Banks on Jun 27, 2013 6:00 pm GMT
Len. I wonder what I would have said if you had come to Another conclusion. It's early here in Sweden, but I might have been forced to open some rot-gut. And although I am too busy right now to look at the sensual NERA report with its groovy sophisticated modeling, I suspect that some rot-gut will be consumed in the Banks household today.

But dont blame the politicians and Investor Community. After all, with that latter you are talking about millionaires who are furious that they arn't billionaires´.

Harry Valentine's picture
Harry Valentine on Jun 27, 2013 6:00 pm GMT
Sasolburg of South Africa refined their technology many years ago to produce synthetic diesel fuel from natural gas. They also produce synthetic gasoline and synthetic aviation fuel from coal. Perhaps there may be opportunity for companies like Sasolburg to establish facilities in the USA to produce synthetic liquid transportation fuels from coal and natural gas.
Len Gould's picture
Len Gould on Jun 27, 2013 6:00 pm GMT
A good relevant read is A People's History of the United States , particularly for its sections on labour relations.

"As historian Howard Zinn shows, many of our country's greatest battles -- the fights for a fair wage, an eight-hour workday, child-labor laws, health and safety standards, universal suffrage, women's rights, racial equality -- were carried out at the grassroots level, against bloody resistance."

Michael Keller's picture
Michael Keller on Jun 27, 2013 6:00 pm GMT
Strikes me that an underlying economic driver is the removal of competing power generating energy sources in the US (and to a degree, the world). The removal of coal and nuclear from the marketplace will invariably create a monopoly-like environment with attendant high prices as the demand for natural gas escalates. Your basic Econ 101 cause-and-affect.

Once again, the law-of-unintended-consequences is rearing its ugly little head as a result of the hysteria over "global warming", which may or may not be occurring and is any case completely beyond our control. Pretty much what to expect from folks who really do not know what the hell they are doing - that would be Washington DC (unless you allow for the actual objective of putting lots of money in their own pockets, in which case maybe they do know what they are doing).

Richard Vesel's picture
Richard Vesel on Jul 2, 2013 6:00 pm GMT
The economic benefits of exporting a low-cost-to-produce resource to high purchase price destinations will NOT acrue to the people of the US in general, unless the process is regulated, and appropriate tariffs are levied. Otherwise, the rich will simply get richer, while depleting a US natural resource, and sticking the general population with the higher prices in the current and future domestic energy markets.

Solution? Gas destined for export should have a tariff added (before CNG or LNG production costs are added), to the following levels which I am suggesting are fair and reasonable based on current information about supply, demand, and world prices. The tariff-added export price per thousand scf should be the larger of $7 or 150% of the day-before closing price at the Henry Hub.

The gas producers should not be able to withdraw and deplete a limited natural resource exclusively for their own financial benefit, and without regard to the general consequences of their activity. These "general consequences" is the huge flaw in raw capitalism's "free market" theory, which people, governments and regulation needs to continuously address, preferably BEFORE the permanent damage is done and the consequences are realized.


Michael Keller's picture
Michael Keller on Jul 2, 2013 6:00 pm GMT
Seems to me your logic would lead to government control of all manner of resources, including food. Who decides "general consequences"? Elitist leftists?
David Bruderly's picture
David Bruderly on Jul 2, 2013 6:00 pm GMT
The NERE LNG Export Study is a sham. It has totally ignored the role that natural gas vehicles are starting to play in improving the economic welfare of virtually every American. Conversion to natural gas motor fuels will reduce fuel bills of American consumers by up to 50%. Yet the macroeconomic analysis of this scenario and associated benefits to American consumers and taxpayers is totally ignored.

Why would the USDOE Office of Fossil Fuels commission a study that ignores the fact that widespread use of domestically produced natural gas as a motor fuel can break the market power of the OPEC cartel?

The NERA Report is a macroeconomic study that purports to assess the economic impact on American consumers of proposals to export up to 40% of American natural gas production. It assumes that billions of dollars of investment capital needed to build this export infrastructure will originate in the United States. Yet it completely ignores the use of natural gas to replace oil as Americas primary motor fuel. It completely ignores the fact that billion dollar investments in LNG export infrastructure might better benefit American consumers if used to replace liquid petroleum-based motor fuels.

Americans now spend about one billion dollars per day to purchase motor fuels made from imported petroleum; petroleum that is priced by a supply-side oligopoly control by a cartel. Given the fact that natural gas is about four times less expensive than oil priced by the OPEC cartel, it does not take sophisticated computer models to conclude that the macroeconomic benefits of investing billions to support LNG exports are much smaller than the macroeconomic benefits investing that money to reduce outflow of American dollars spent on petroleum imports.

The simplistic models used by NERA do not work when the assumptions that drive the model completely ignore the market power of the Organization of Oil Producing Countries (OPEC). OPEC is a supply-side oil oligopoly that does not set prices based on classic supply-demand models. Basically the NERA study assumes that this supply-side oligopoly will continue to exert market power over virtually every American driver.

It is bad enough that the US government continues this charade; but I am appalled that this glaring oversight has been ignored by virtually every economist and journalist participating in the process. What happened to independent journalism? What happened to intellectual honesty?

It is a fact that OPEC will continue to dominate American motor fuel markets as long as economists and politicians use models that assume that a supply-side oil oligopoly controlled by a cartel of foreign governments serves the economic interests of American consumers. It is also a fact that American taxpayers would never have tolerated spending 3 to 5 trillion dollars in military activity in the Middle East over the past 30-years if OPEC had cornered the global broccoli markets.

Don Hirschberg's picture
Don Hirschberg on Jul 2, 2013 6:00 pm GMT
“The U.S. is producing more natural gas than we can use. “ Why is this presented as a problem? Can't we produce most everything at a greater rate than we can use?

Not so long ago the Texas Railroad Commission told oil producers how many days they could produce each month.

Bruce McKay's picture
Bruce McKay on Jul 2, 2013 6:00 pm GMT
Only "the rich will get richer?" Tell that to the landowner who is selling the gas, the local lawyer who handled the leasing arrangements, the guy working on the rig, the local catering company who feeds the workers, the person working at the gas processing plant, the person working for the pipeline company that gets the gas to an export terminal, and the thousands of constructions workers who will work for years building these multi-billion dollar terminals.

If we tell Ford they can no longer export cars, is that a winner for U.S. consumers? Sure, in the short term there will be a glut of cars and prices will fall. Then Ford will close production facilities and fire workers in order to adjust to the new lower demand. Then they will go overseas and build plants and hire their people to build cars. Until other countries, with even more shale gas underfoot than the U.S., figure out how to duplicate our success, we can capture a share of the global market while employing more Americans, reducing the trade deficit, collecting billions in new government tax revenues, and reducing the influence of Russia and Iran. That's a grand slam.

Don Hirschberg's picture
Don Hirschberg on Jul 2, 2013 6:00 pm GMT
I'm thinking back to when foreign oil was $2 a barrel. I'm scratching my head and cannot guarantee the precision of my remembered numbers but rest assured they are close enough to make my point.

It was before Peak Oil Theory and the US was producing as much oil as all the Middle East countries combined. The US strictly limited the importation of 2 dollar foreign oil by issuing allowances. Our producers got far more for a barrel of oil.

I was doing some work for Commonwealth Oil refinery west of Ponce, Puerto Rico. Commonwealth had a foreign crude allotment – like a license to steal. They could buy Venezuelan crude at maybe $1.80/B, and because they were Americans could sell at US gulf coast prices. They had over a dollar a barrel between crude and product. (Domestic refiners might have had a dime margin.) The refinery wasn't being run very well – the reason I was there.

At that time there were over 300 US oil refineries, most of them small. Now most of our oil is refined in a few dozen very large refineries. (Small refiners could not comply with many of the ever stricter regulations on water, air, smell, noise pollution and the specifications imposed by the common carrier pipe lines to suit the majors. How does a small refiner get rid of even a small amount of salty water that settled out of their crude?

Finally to the point. If the US had not for decades burned up 9-10 million barrels per day of domestic crude but had burned up $2 and cheaper foreign crude we would have saved a lot of money and been in much better shape from the ensuing 70's, or 80's on.

So I ask. Is it wise to export our depletible gas?

Ferdinand E. Banks's picture
Ferdinand E. Banks on Jul 3, 2013 6:00 pm GMT
Don, I Think you mean that it was before PEAK OIL (in the US), because peak oil in the US was more than a THEORY. It was a fact, and behind it were oil companies that were acting rationally, just as OPEC is acting rationally

As for the US exporting very large quantities of natural gas, I say to blazes with that. The situation is the same as the Swedish government listening to moronic academics and allowing wires to be constructed between Sweden and the other side of the Baltic. In other Words, the short answer to your question is that millionaires who want to be billionaires should not be given the right to do what they feel like doing with the exhaustible resources of the US,

And Mr McKay, there is a very big difference between exporting automobiles and exporting exhaustible resources. There was a very interesting discussion about this in Australia a short time ago, and just just in Australia. And let me ask you the following:: how did Russia get into this discussion?

As for Mr Bruderly, his contribution makes a lot of sense in some places, and none at all in others. This business of putting the OPEC cartel in its place appeared years before the shale gas scene developed to what it is now. In those days the talk about using enormous amounts of gas as motor fuel was strictly crank. At the present time, if shale gas can do what the shale gas fanatics and propagandists think that it can do, it is a different story, but in truth we dont know how much shale gas is going to be available. The CEO of Exxon has said that shale gas operations outside the US have not gone well, and even some shales in the US are not providing the flows that were thought possible only a few years ago. So there is really no reason to provoke OPEC until the dreams about swimming in natural gas come true....

Ferdinand E. Banks's picture
Ferdinand E. Banks on Jul 3, 2013 6:00 pm GMT
And I agree of a lot of what you say Fred, especially about CNN, which is doing everything possible to help Hollywood and US television dumb down the young people in our World.
Michael Keller's picture
Michael Keller on Jul 3, 2013 6:00 pm GMT
Seems to me the owners of the natural gas have a right to do with their property as they see fit. Those who advocate government seizure of such assets are no better than the "capitalists" they so vehemently condemn. Strikes me there is an embedded and deep streak of envy of those who are better off financially and a desire to use the government to bludgeon the "rich". That kind of attitude is unhelpful, and invariably leads to poor solutions that do more harm than good.

All things considered, I do not believe it unreasonable to assess some form of tax on exporting natural gas, with the proceeds used only to increase the efficiency of using natural gas in this country. The politicians and government should be absolutely prohibited from using the revenue for anything else.

Michael Keller's picture
Michael Keller on Jul 3, 2013 6:00 pm GMT
As to Fred Linn and his "evil" oil industry folks, the obvious solution is competition. Lots of it and involving all types of energy resources. That is the best way to keep companies honest. To the extent that the government hamstrings competition, that only serves to play right into the hands of those nefariously lining their pockets with money.
Bruce McKay's picture
Bruce McKay on Jul 3, 2013 6:00 pm GMT
Regardless of whether placing a tax on LNG exports would be a good or bad idea, the fact is it would be unconstitutional. You just can't tax exports.

Article 1 Section 9: No Tax or Duty shall be laid on Articles exported from any State.

Michael Keller's picture
Michael Keller on Jul 3, 2013 6:00 pm GMT
The only way to tax the export of natural gas is to level such a tax on all natural gas production in the US. A tax credit to users might be a way around that (although that may end up in court) as well as possibly removing the depletion credit used by the oil and gas industry for gas shipped overseas. The later is not a tax and can and has been increased/decreased over the years on various items.

Also, those who resort to insurrection invite violence from on quarter or the other.

Ferdinand E. Banks's picture
Ferdinand E. Banks on Jul 3, 2013 6:00 pm GMT
I want to see a tax on energy exports, Fred Linn, or better yet, energy exports strictly regulated in such a way that export is forbidden, and anyone playing games with energy exports immediately escorted to a reopened Alcatraz. Of course, eventually it will come down to a tax or something similar on energy exports, and so why not now, so that 'folks' will have time to get used to it - where by folks I mean the 106 Congressional fools who want US energy resources put on the block.

Amazing isn't it how simple many crucially important things are. Dumb George W. starts a war on the basis of a lie, and the voters give him another term. Had the 75 mm gun on the Sherman tank been replaced by one of 85 mm - as the Russians did - the 2nd WW would have been over by Christmas of 1944, and making this adjustment would have been easy peasy for American managers and technicians. And so on and so forth. Now it's a matter recognizing the importance of energy - and things like primary and secondary education - but the voters are too busy watching crummy TV tell Mr O. that the US needs better schools instead of sending marines to Australia to drink beer.

What's next?

Michael Keller's picture
Michael Keller on Jul 3, 2013 6:00 pm GMT
Could resort to massive peaceful protests. Seems to have worked for the Egyptians. Hope it works out for them as they deserve better than the economic misery of the recent past.
Len Gould's picture
Len Gould on Jul 4, 2013 6:00 pm GMT
"Article 1 Section 9: No Tax or Duty shall be laid on Articles exported from any State." -- I'm pretty sure that item of the constitution only prohibits IMPORT duties imposed by an importing state of the US on goods imported from another state of the US. It's strictly written to disallow any state from imposing tariffs on goods traded within the US, and has nothing to say about goods exported from the US entirely.
Bruce McKay's picture
Bruce McKay on Jul 5, 2013 6:00 pm GMT
The Constitutional prohibition on exports does indeed prohibit a tax on exports from the U.S. to another country. If you need an authoritative source you can read the Congress Research Service's report on this very issue. The link is below. Or simply Google the question and you will find many articles about it.

Len Gould's picture
Len Gould on Jul 5, 2013 6:00 pm GMT
Ok Bruce. It seems it is illegal for congress to tariff an export. Weird. I wonder how that clause got into the constitution? Certainly the framers couldn't have anticipated the present situation re: energy exports. Probably originally intended to be interpreted the way I did (the obvious, that is, no tariffs on internal trade between states), but not worded succinctly enough for todays lawyers.
Ferdinand E. Banks's picture
Ferdinand E. Banks on Jul 5, 2013 6:00 pm GMT
Still Reading those newspapers, are you Fred Linn? Still Reading what ignorant journalists have to say about the great World of energy economics?. Still Reading those lies and misunderstandings? Well if things keep going the way that they have been going for Vestus the last few years, their managers will be on the Welfare rolls Before long.
Don Hirschberg's picture
Don Hirschberg on Jul 5, 2013 6:00 pm GMT
There are some prolific commenters on this site who year after year take every opportunity to disparage, sometimes subtly, the US, Americans, and our Constitution whether the comments are germane or not, whether to the issue or not.

In just my personal memory I have vestiges of the Armenian genocide by the Turks, Italy invading Ethiopia, Abyssinia, and Albania. Japanese routinely committing the most egregious attrocities in Korea, China, and Asia year after year before their atrocious behavior in WWII. Unspeakable things in the USSR. The terrible Spanish Revolution with its mass executions. The less than than stellar behavior of European countries in Black Africa. Nazis and a docile and shamefully complicit German population and later complicit occupied populations. The German population of the Hitler era was the most enlightened, educated and sophisticated people ever. Too numerous wars and revolutions in Latin America to mention. ...just off the top of my head.

So what do we get lectured about? The 1921 Battle of Blair Mountain, long before my memory in which perhaps 100 people were killed in 5 days. In the last 5 days more than 100 American Blacks have likely been killed by American Blacks. Now there is something to be incensed about !!... not some sniping about the Constitution.

Ferdinand E. Banks's picture
Ferdinand E. Banks on Jul 6, 2013 6:00 pm GMT
I',m not going to argue with you about Vestus, Fred Linn, because I read Danish and you don't. As long as I remember Vestus has been going down the hill economically, and perhaps you should recognize the following: Denmark gets only about 26 percent of its electricity from wind. I dont know how much of that is subsidized, and dont care, but you need to tell us from where they get the rest. Unless I'm mistaken, coal plays a part and I never Heard anyone say that more wind energy was going to be produced in that country, although I am sure that there are some stupid academics in Scandinavia who can tell us some of what we sant to know....

And Don, I dont know remember any disparaging of the US on this site, although of course I have referred to George W. as stupid and Mr Obama as ignorant. In other Words, 16 years down the drain. Take for instance the ignorant Mr Obama. Instead of doing something about the schools on the South side of Chicago, he plans to send marines to Australia to drink beer.

About these things done by 'other people'. The underprivileged and unfed abroad should be helped with Money and experts, but that's it. Having to hear about how wonderful they are from CNN fools is really...really....

Len Gould's picture
Len Gould on Jul 7, 2013 6:00 pm GMT
Don. I accept your criticism as valid, but not significant. If I recall correctly from playground ethics, the fact that someone else did something nasty doesn't excuse me from anything nasty I may have done.
Don Hirschberg's picture
Don Hirschberg on Jul 7, 2013 6:00 pm GMT
Len, It is not about playground ethics thank you but about adult proportionalities.

New subject. Quebec “runaway” train. Why was this train carrying crude oil to Maine. One only expects crude oil to be taken to an oil refinery. Where? Even a very small refinery processes 10,000 barrels per day. This would require a dedicated train every 24 hours. Perhaps this crude is from some stripper wells that only accumulate enough for a timely train shipment. Of course the news reports could be wrong. Your news is likely to have more details?

Don Hirschberg's picture
Don Hirschberg on Jul 7, 2013 6:00 pm GMT
Len, I just recall that a grass roots refinery was built in Newfoundland about 1970 at Come-By-Chance. My brain's memory bank offers no other refineries in the area. I was never there but a colleague, Ray Herber ,was and enjoyed the New-fees (?) spl.
Don Hirschberg's picture
Don Hirschberg on Jul 8, 2013 6:00 pm GMT
Even counting for my ancestors Danes do not account for much in the global energy picture. Maybe one part in a thousand.

It is all about numbers. Sorry, Denmark hardly counts. Face reality. .

Ferdinand E. Banks's picture
Ferdinand E. Banks on Jul 8, 2013 6:00 pm GMT
Beautiful, Fred Linn. Beautiful. Now I have a question for you.

Instead of planning to double output, why don't they just increase it by one per-cent? 1%. Well, as I tell the academic ignoramuses in Stockholm, I try to avoid asking questions that I can't answer, although I have to deviate from this practice when dealing with intelligent people.

The answer is simple isn't it. Denmark is a small country, comparatively well off, and can get all the electricity they need from surrounding countries, IF THEY CAN AFFORD IT, and they can. Germany has made the same calculation.

Now let's get something straight. I Think that it's great that Denmark has 25% rather than 24%, even if subsidies are necessary. I say all the wind and solar that we can afford, We Owe that to the voters who want it. But a PLAN to double the output from wind? That tells me that someone should go to Denmark Before summer is over and drink some beer in the Tivoli...You know, like your favorite president Mr Obama is going to send marines to Australia to drink beer.


Len Gould's picture
Len Gould on Jul 9, 2013 6:00 pm GMT
Don. There's several refineries in eastern Canada, all according to this table supplied with crude from overseas. My guess is that they are trying to push a few trainloads through from western Canada to reduce imports and improve markets for western oil, as well as exploit reduced prices of western Cdn oil due to export pipeline delays. At say 100 cu m. per car, and 100 cars per train, still each trainload would only supply the St. John Irving refinery for about 5 hours. (47,500 cu m / day capacity).
Don Hirschberg's picture
Don Hirschberg on Jul 9, 2013 6:00 pm GMT
This morning's Arkansas Gazette had a story that gives facts about he Quebec train disaster. The oil is from North Dakota and headed for a refinery on the New Brunswick coast. (Not going to Maine which I thought from the start was wrong.) The train was a nunaway for about 7 miles. Six cars “exploded and burned. I just heard from Fox News that police have initiated an investigation.

Many people still missing.

Don Hirschberg's picture
Don Hirschberg on Jul 9, 2013 6:00 pm GMT
The train was parked on a 1.2% grade, which is quite steep for a railway and was unattended. Hand brakes should have been routinely set. Crew asleep in a hotel? It would appear that either the train crew was guilty of gross negligence or there was criminal involvement. I can see why the police are investigating. Deaths stand at 15 but about 40 people are are still unaccounted for. Lots of explanations needed.
Len Gould's picture
Len Gould on Jul 10, 2013 6:00 pm GMT
St. John is a coastal city in New Brunswick.
Malcolm Rawlingson's picture
Malcolm Rawlingson on Jul 11, 2013 6:00 pm GMT
Very sad news concerning Lac Magentic in Quebec. My heart goes out to those who have lost friends and family. It should underscore the fact that moving vast amounts of fossil fuels around - especially highly combustible ones - is a very dangerous business. Moving vast amounts of LNG about is also dangerous. I sincerely hope one of those tankers does not run aground and explode near an unsuspecting coastal community.

While I very much dislike making a comparison when a tragedy such as this occurs one wonders why the media is not calling for a complete ban on the movement of crude oil by rail. Or a ban on the use of crude oil. I do assure you that if fifty people had lost their lives as a result of a nuclear incident that is exactly the outcry we would be hearing. Why the difference?

Here is the comparison:

Lac Magentic: Fifty people dead as a result of moving crude oil - carry on shipping the stuff as if nothing happened. Media silent about the risks of crude oil use. No railways shut down for inspection. Everything carries on as normal.

Fukushima: No body killed or injured as a result of the damage to the Fukushima plant. Thousands evacuated. All nuclear plants in Japan shutdown for inspection.

If that is not 100% pure hypocrisy then my name is Angela Merkel.

Has Germany banned the use of crude oil as a result of this tragic loss of human life - No.

Apparently killing people with crude oil is acceptable. A sad state of affairs.


Malcolm Rawlingson's picture
Malcolm Rawlingson on Jul 11, 2013 6:00 pm GMT
And to Mr. Linn. Will you PLEASE refrain from using installed GW as some measure of success for the wind industry.

What matters is GigaWatt-HOURS and that my friend is pitiful. The only reason Denmark is able to us wind and still run its economy is that it is surrounded by countries with plenmty of electricity to spare and taps into those resources when the wind does not blow.

Another example of pure unadulterated hypocrisy. Pretend wind is powering a tiny country like Denmark by using useless installed capacity numbers and then say this will work everywhere in the world when it patently and provably cannot.

Vestas if you pay any attention to business news (and as Fred Banks underscores) is going broke and laying off thousands of workers in Denmark. Within 5 years they will be gone. What they do works only when heavily subsidized by Governments. With most of Europe nearly bankrupt the gravy train of subsidies is stopped. Two of the heaviest subsidizers of wind energy - Portugal and Spain are already broke and new subsidies are gone. Now these technologies will need to stand on their own and of course with pitiful capacity factors of 25% or worse even at the best wind sites they are simply uneconomic.

The era of wind energy in Europe is winding down. Germany now wants to place hundreds of wind turbines in the most picturesque parts of Bavaria and is meeting very very stiff opposition - notable because that is where many of the elites in Germany have their homes - surprising that eh!!!

Wind energy does not, did not and never will make any economic sense and as for meeting the worlds energy requirements. Not a chance.

You can install all the GigaWatts you want. When the winds stops blowing the output is zero. And that to me is a bit of an intractable problem.


Malcolm Rawlingson's picture
Malcolm Rawlingson on Jul 14, 2013 6:00 pm GMT
No. Never lived (or wanted to live) in South Dakota thanks Fred. You must be thinking of someone else. Electricity is lower than that in Canada but it depends how you measure it and where you live. On our bills here in Ontario there are numerous surcharges that are not directly related to the price of the kW consumed. But if you take the actual cost of the product and disregard all the surcharges then yes we do pay less than 14c/kW hour....largely as a result of large nuclear plants and large hydroelectric plants. Not as a result of wind generation which has the opposite effect since suppliers are paid a premium well above that rate.

But, as you normally do, you have avoided answering the question posed to you which is what do you use to supply electricity when the installed GW of wind energy are producing zero GigaWatt Hours beacasue the wind is not blowing.

As in Denmark the power will either come from gas, coal, oil or nuclear or hydro and supplied from friendly countries who like to make money from you. That means you need to build a wind plant AND another plant. That is double the capital cost and is economic insanity. the Danes have not needed to build two sets of plants as they rely on their neighbours (and do not forget Denmark is a tiny tiny blip on the power consumption of Europe) therefore their power needs are simply and easily met by Sweden or Germany or France firing up a plant or two when the wind dies down.


Len Gould's picture
Len Gould on Jul 14, 2013 6:00 pm GMT
I note Siemens using in their promotions, the fact that they alone have built / are building, in Germany, 4 new 800 MW ultra-super-critical coal-fired stations scheduled for startup from 2011 to 2013. Preparing for the nuclear shutdown?

USC Steam Turbine Technology - see pp 5

Richard Vesel's picture
Richard Vesel on Jul 15, 2013 6:00 pm GMT
Bruce McKay - an excellent contribution about the Export Clause.

Seems this is something Congress should address, but it would probably open a decades-long debate about what would constitute a strategic resource, or depletable resource, etc. etc.

We already just plain forbid the export of pertroleum on that basis, and it might be wise to at least consider doing that for fossil methane, thereby bypassing the tariff issue. We have a good domestic offshore target market, known as our 50th state, which already imports huge supplies of gasoline and fuel oil for transportation, shipping and power generation. Conversion to gas for much of that would insure a decent sized offshore market, which would still not be a true export destination. And the Hawaiians would then share the benefits of the dash to gas, as their power and transportation energy costs would be cut about in half.

The main thing that it would be desirable to slow the use of depletable NATIONAL resources when they are seen as merely an enabler for what Fred (and I) see as simply a millionaire-to-billionaire conversion mechanism, ultimately at the expense of the rest of us.


Michael Keller's picture
Michael Keller on Jul 16, 2013 6:00 pm GMT
I live in Kansas and the wind is more or less not around much of the summer when it is hottest and power requirements are high. There is no way in hell the state could rely on wind for 25% of the power needs in the summer.

You really need to refrain from your simplistic, inaccurate and economically nonsensical statements.

If the folks in Texas want to build unneeded wind turbines, that is their business. However, their electric bills will go higher than necessary (which is exactly what has occurred).

Richard Vesel's picture
Richard Vesel on Jul 16, 2013 6:00 pm GMT
Mr. Keller,

Perhaps you should back up your claims of state wind activity at 6' elevation, within a 20' radius of your location at any time in Kansas, as compared to charts and historical records of what is happening, on average, at 150'+, for the entire state?

That would be a reproach based on science, rather than anecdotal personal experience. For all we know, you might be experiencing a local effect resulting from a family of poltergeists surrounding you, whose existence you might not be willing to acknowledge? That's the value of science vs. personal anecdote.


Michael Keller's picture
Michael Keller on Jul 16, 2013 6:00 pm GMT
Actually, the Flint Hills and middle part of the state (where there are some wind turbines) have the most wind in Kansas, but even in the summer, there isn't much. Further, most of the wind shows up during overnight hours during the rest of the year. The wind turbines in Kansas would not exist without Federal subsidies (and mandates), as the conventional plants are much more cost effective and we do not need the power in any case.

Remember I live hear and also have ready access to the actual data, which clearly shows I am right.

As usual, you are incapable of applying logic and must resort to ad-hominid attacks.

Richard Vesel's picture
Richard Vesel on Jul 17, 2013 6:00 pm GMT
Well, gee - what you have access to doesn't seem to be reflected in the wind maps for Kansas. The central part of the state is not necessarily the most ideal. It is center and west, as well as southwest. I invite you to examine the MEASURED quality of wind.

The only state with better overall wind generation capability, using exactly the same criteria of MW potential per 5sqkm (average) is Texas. Kansas ranks #2. You might actually look to invest, rather than bash. It'll make you more money, lol

Multiple level maps here:

In particular, the map of the elevation I goaded you about above - 50 meters:

So, where you live seems to be of secondary importance to the quality of information which you seek, and are objective enough to grant as "factual". Otherwise, it is just anecdote. The opinions of people who can only validate their truths with anecdote can be dismissed is not being terribly useful...


Michael Keller's picture
Michael Keller on Jul 23, 2013 6:00 pm GMT
Why would I want to invest in something that is a federal contrivance? Without the feed-in tariff, wind ceases to be viable, as we have seen every time Federal support disappears.

Overland Park, Kansas is a poor place to put a wind turbine, which is why we do not have any of the bird killing, insomnia breeding contraptions.

Fact: we do not have much wind in Kansas when its hot and we need the power, as the data clearly shows. Have a lot in the winter, but mostly at night when we do not need the power.

Fortunately, not too many folks like you live here, although Lawrence, Kansas has an inordinate number of nitwits.

Richard Vesel's picture
Richard Vesel on Aug 27, 2013 6:00 pm GMT
Today, August 27th, at noon in KS, it's a hot day and the wind is blowing pretty well.

Use this link to check current conditions, any time day or night:

Spent a lot of time in Lawrence, working at Westar - not a kook to be found anywhere in town. Great bars, shops, and one of the best college basketball teams you can find, too. Even the margaritas are good in Lawrence! Worst aspect, smells near the dogfood plant, lol

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