Jul26
Petroleum and Natural Gas Watch, Vol. 5, Number 3
July 25, 2006
by Michael Vickerman, RENEW Wisconsin
The draft Strategic Energy Assessment issued by the Wisconsin Public Service Commission is a particularly fine example of a government report that is interesting only for what it leaves out. Covering the years 2006 through 2012, the SEA purports to bring to light “issues that may need to be addressed to ensure the availability and reliability of Wisconsin’s electric energy supply.” Unfortunately, from a planning perspective, what the report does not address is far more critical to Wisconsin’s electricity future than what is presented in the report.
Take, for instance, the impending global Oil Peak, which many respected petroleum geologists believe will occur between 2006 and 2012. One searches in vain for any reference to a phenomenon that promises to subject the nations of the world to a profoundly wrenching and traumatic transition as supplies of gasoline, diesel, and jet fuel become less available and more expensive. How should Wisconsin, which is bereft of any fossil fuel reserves and therefore must import all its coal, oil and natural gas, go about preparing for an energy-constrained future? It’s a question worthy of public discussion and debate, but one the PSC, notwithstanding the first word in its name, lacks the stomach for, or so it would appear.
Coal prices provide one obvious clue as to how the oil peak might affect utility operations. Right now, transportation costs account for about half the price of coal that is delivered to Wisconsin power plants. Therefore, when diesel fuel prices increase, as they have over the last 12 months, so too will the cost of coal generation. Yet the report omits any discussion of likely coal price behavior over the next six years. How is the public served by ignoring the relationship between escalating fuel costs and the delivered cost of coal for power generation?
Natural gas prices will also have a bearing on the economics of coal, the principal source of electricity in Wisconsin. Escalating natural gas prices provides coal producers with more headroom in bidding up their prices, a strategic opportunity they seldom fail to capitalize on.
As one might expect with such a manifestly disconnected document, this version of the SEA has a few surreal touches. One of them is the suggestion that increasing natural gas supplies would moderate prices. While true in theory, this statement rather bizarrely overlooks recent U.S. consumption and extraction data. In its Annual Energy Review for 2004, the Energy Information Administration reveals that both domestic extraction volumes and consumption have declined this decade. This trend accelerated in 2005 with the hurricanes that devastated the Gulf Coast energy complex, leaving parts of it beyond repair. True, inventories of stored natural gas are now at five-year highs, but that’s the result of intensified demand destruction, not increased output.
The suggestion that natural gas supplies can be increased in the United States has no basis in reality. Any entity that promotes that particular fantasy should be required to produce the magic wand or the battered oil lamp or the ruby-red slippers necessary to make that wish a reality.
Another curious feature of this SEA is its discussion of renewable energy resources, which is so perfunctory and devoid of context as to be utterly useless for policymaking purposes. There is no discussion of why renewable energy development is vital for Wisconsin’s future. Reading this document, one wonders what the Doyle Administration sees in renewable energy that would explain the Governor’s recent articulation of a 25% renewable energy goal by 2025.
Is it an insignificant fact that renewable resources are locally available (unlike fossil fuels and uranium), not subject to depletion (unlike fossil fuels and uranium), and unaffected by price volatility in the energy commodity markets (unlike fossil fuels and uranium)? One wouldn’t think so, but the report’s authors appear to have been driven by other, larger motivations, such as the need to scrupulously avoid consideration of scenarios that might challenge the expectation that Wisconsin’s economy will grow as smartly in the future as it did in the recent past. As a result of that orientation, the report is silent on such issues as Peak Oil, climate change, and Wisconsin’s growing dependence on fossil fuel imports, lest anyone come away with the nagging suspicion that the state would be better served by a plan that presupposes the very real possibility of harder economic times.
Government agencies that pretend that the oil peak (or plateau) will not happen on their watch deprive themselves of the ability to prepare for it. There is certainly room for disagreement as to when this phenomenon will occur, and how profound its repercussions will be, but there is absolutely no excuse for pretending that as long as we don’t think about it, we’ll be safe.
It is clear that the Public Service Commission is not invested in the Strategic Energy Assessment process, and the result is a document that has little relevance to any serious effort to shape the state’s energy future. Denial and taboos have no business in a planning process. Either we recognize the need to promulgate a plan for managing the transition to a new energy reality, or we can hope that our prodigious talent for escapism will keep Peak Oil, climate change and hard economic times from intruding upon the dreamworld we inhabit.
Sources:
Energy Information Agency/Annual Energy Review 2004, Table 6.1.
Petroleum and Natural Gas Watch is a RENEW Wisconsin initiative tracking the supply demand equation for these fossil fuels, and analyzing its effects on prices, consumption levels, and the development of energy conservation strategies and renewable energy alternatives. For more information on the global and national petroleum and natural gas supply picture, visit "The End of Cheap Oil" section in RENEW Wisconsin's web site: www.renewwisconsin.org
by Michael Vickerman, RENEW Wisconsin
The draft Strategic Energy Assessment issued by the Wisconsin Public Service Commission is a particularly fine example of a government report that is interesting only for what it leaves out. Covering the years 2006 through 2012, the SEA purports to bring to light “issues that may need to be addressed to ensure the availability and reliability of Wisconsin’s electric energy supply.” Unfortunately, from a planning perspective, what the report does not address is far more critical to Wisconsin’s electricity future than what is presented in the report.
Take, for instance, the impending global Oil Peak, which many respected petroleum geologists believe will occur between 2006 and 2012. One searches in vain for any reference to a phenomenon that promises to subject the nations of the world to a profoundly wrenching and traumatic transition as supplies of gasoline, diesel, and jet fuel become less available and more expensive. How should Wisconsin, which is bereft of any fossil fuel reserves and therefore must import all its coal, oil and natural gas, go about preparing for an energy-constrained future? It’s a question worthy of public discussion and debate, but one the PSC, notwithstanding the first word in its name, lacks the stomach for, or so it would appear.
Coal prices provide one obvious clue as to how the oil peak might affect utility operations. Right now, transportation costs account for about half the price of coal that is delivered to Wisconsin power plants. Therefore, when diesel fuel prices increase, as they have over the last 12 months, so too will the cost of coal generation. Yet the report omits any discussion of likely coal price behavior over the next six years. How is the public served by ignoring the relationship between escalating fuel costs and the delivered cost of coal for power generation?
Natural gas prices will also have a bearing on the economics of coal, the principal source of electricity in Wisconsin. Escalating natural gas prices provides coal producers with more headroom in bidding up their prices, a strategic opportunity they seldom fail to capitalize on.
As one might expect with such a manifestly disconnected document, this version of the SEA has a few surreal touches. One of them is the suggestion that increasing natural gas supplies would moderate prices. While true in theory, this statement rather bizarrely overlooks recent U.S. consumption and extraction data. In its Annual Energy Review for 2004, the Energy Information Administration reveals that both domestic extraction volumes and consumption have declined this decade. This trend accelerated in 2005 with the hurricanes that devastated the Gulf Coast energy complex, leaving parts of it beyond repair. True, inventories of stored natural gas are now at five-year highs, but that’s the result of intensified demand destruction, not increased output.
The suggestion that natural gas supplies can be increased in the United States has no basis in reality. Any entity that promotes that particular fantasy should be required to produce the magic wand or the battered oil lamp or the ruby-red slippers necessary to make that wish a reality.
Another curious feature of this SEA is its discussion of renewable energy resources, which is so perfunctory and devoid of context as to be utterly useless for policymaking purposes. There is no discussion of why renewable energy development is vital for Wisconsin’s future. Reading this document, one wonders what the Doyle Administration sees in renewable energy that would explain the Governor’s recent articulation of a 25% renewable energy goal by 2025.
Is it an insignificant fact that renewable resources are locally available (unlike fossil fuels and uranium), not subject to depletion (unlike fossil fuels and uranium), and unaffected by price volatility in the energy commodity markets (unlike fossil fuels and uranium)? One wouldn’t think so, but the report’s authors appear to have been driven by other, larger motivations, such as the need to scrupulously avoid consideration of scenarios that might challenge the expectation that Wisconsin’s economy will grow as smartly in the future as it did in the recent past. As a result of that orientation, the report is silent on such issues as Peak Oil, climate change, and Wisconsin’s growing dependence on fossil fuel imports, lest anyone come away with the nagging suspicion that the state would be better served by a plan that presupposes the very real possibility of harder economic times.
Government agencies that pretend that the oil peak (or plateau) will not happen on their watch deprive themselves of the ability to prepare for it. There is certainly room for disagreement as to when this phenomenon will occur, and how profound its repercussions will be, but there is absolutely no excuse for pretending that as long as we don’t think about it, we’ll be safe.
It is clear that the Public Service Commission is not invested in the Strategic Energy Assessment process, and the result is a document that has little relevance to any serious effort to shape the state’s energy future. Denial and taboos have no business in a planning process. Either we recognize the need to promulgate a plan for managing the transition to a new energy reality, or we can hope that our prodigious talent for escapism will keep Peak Oil, climate change and hard economic times from intruding upon the dreamworld we inhabit.
Sources:
Energy Information Agency/Annual Energy Review 2004, Table 6.1.
Petroleum and Natural Gas Watch is a RENEW Wisconsin initiative tracking the supply demand equation for these fossil fuels, and analyzing its effects on prices, consumption levels, and the development of energy conservation strategies and renewable energy alternatives. For more information on the global and national petroleum and natural gas supply picture, visit "The End of Cheap Oil" section in RENEW Wisconsin's web site: www.renewwisconsin.org