What’s the Problem With Energy These Days?
For those of us who live in North America, recent price hikes in Natural Gas, Gasoline and Diesel have largely gone unnoticed. It is not cold enough for those using NatGas to heat their homes enough to notice the giant increase in price and the retail price of transportation fuels seem to be chalked up to the usual summer driving season spikes.
For those in the UK, Europe and parts of Asia, however, price hikes and shortages are nothing short of a full blown international emergency:
- The United Kingdom now has the most expensive electricity in Europe, and that is saying something
- In Germany, they don’t have enough natural gas to produce electricity or heat homes
- China is so short of electricity they are unilaterally turning off the power (for weeks at a time!) to big energy consumers like the gigantic factories that make components for your Apple iPhone
These are not trivial and worse they are not transient. While the energy crisis is “overseas” to us in Canada and the United States, it won’t be for long.
Oil and gas companies have been punished (at a minimum, they have not been rewarded) in the last five years for producing more energy. In 2021 they can no longer raise capital through the public markets to invest in new exploration or production because:
- existing shareholders are insisting on ever higher returns to justify their continued support
- other market participants will not consider oil and gas stocks for fear of annoying those with extreme ESG sensitivities
So oil companies are simply milking their existing supply rather than exploring for new fields. The largest new reservoir that has been found in the last 5 years was on the East coast of Canada a few years ago, and if we drained it all we would produce only enough energy to power the world for one week.
The fact is that consumption of oil and gas has come roaring back after the (hopefully!) worst of COVID-19 while the production continues its dangerous decline of the last decade.
Replacing existing supplies of energy is not nearly enough to avoid an energy crisis.
Something often forgotten in discussions of energy policy is the constant increase in demand we have seen in the last 50 years and the amazing growth in demand we forecast for the next 50 years. In Canada for instance, Bloomberg reports:
“…For perspective, consider Ontario’s Bruce Power nuclear facility. It took 27 years to bring that plant to its current 6.4 gigawatt (GW) capacity, but meeting Canada’s decarbonization goals will require adding roughly the equivalent capacity of Bruce Power every year for the next three decades. SOURCE
What Are Countries Doing To Make More Energy Fast?
In Sweden, they have fired up their oldest electricity plant which burns fuel oil, yes fuel OIL!
In China, companies are using their diesel backup generators to make electricity to keep their plants operational.
The United Kingdom has started up old coal power plants.
All of these are bad… very bad… for the environment.
Why Don’t We Have Enough Energy?
Our energy shortage is caused by four things:
1: Political Decisions
Short term political decisions causing a predictable medium term energy crisis.
Politicians have listened closely to a loud, motivated and well funded group of green warriors who have demanded that our reliable energy sources like natural gas be supplanted by solar and wind. This is Germany’s problem. In fact Germany is set to shut down their last nuclear plant in 2022 because ill-informed anti-nuclear protestors have demanded it.
In China’s case it’s communist central planning government underestimated the demands of their growing economy.
Politicians want to be, and should be, responsive to the demands of their citizens but surely politicians must also provide rational leadership through times of transition. Changes from a mostly carbon based energy world to a mostly renewable energy based world requires both planning and leadership. However, in a world of two to four year election cycles, our political leadership is necessarily focused on the short term.
2: Oil & Gas Industry As Satan
For many the oil and gas industry has become the new Satan. With an almost religious conviction, oil and gas producers are flagged as wrongdoers. The nightly news shows how they single handedly pollute our air, destroy our land and take political favors that are rightfully due to solar and wind companies.
The oil and gas industry being vilified for producing the very thing we all need to survive in a modern world.
Like everything else in the world, producers produce what is demanded by consumers. Those with harsh intent would say ‘If you don’t like oil and gas then turn off your furnace, don’t drive or take the bus, and sell all of your plastic necessities toys (phones, TV’s, monitors, laptops, medical grade oxygen tubes…)’. Obviously, that is not going to happen, but we think it is reasonable that those who are the loudest in this green energy debate take the high ground by avoiding airplane travel and seriously reducing their consumption before they start yelling at the populus.
3: Nuclear Boogieman
Many (most?) citizens have an irrational fear of nuclear energy because they have been fed a steady diet of “nuclear will kill us all” stories which the media has failed to fact check but had no difficulty promoting.
Did you know that even today, the United States gets 20% of its electricity from nuclear plants? When was the last time you heard of a problem with those facilities?
The only three notable incidents with nuclear generated electricity were:
- The Chernobyl disaster in Russia from an incredibly poorly designed facility that should have never been built. And even in this extreme case, the accident has had limited long term effect. The claims of millions of deaths and a destroyed environment surrounding the mangled facility did not come to pass. In fact the “exclusion zone” is now just an 18 mile radius that 7000 people STILL legally live inside.
- Japan’s Fukushima Daiichi disaster which killed 1368 locals had known design problems and was scheduled for shutdown just months after the date of the incident. Again its exclusion zone is now down to just an 18 mile radius and it will get smaller and smaller over time.
- Three Mile Island in Pennsylvania had a scare in 1979 that lead to… nothing. In fact that facility stayed operation safely making electricy until September of 2019.
Nuclear electricity plants are the only large scale CONSUMERS of nuclear weapons. If you want to get rid of “nukes”, you need nuclear plants.
Nuclear waste is a small problem, not a crisis:
“…the U.S. has produced roughly 83,000 metric tons of used fuel since the 1950s—and all of it could fit on a single football field at a depth of less than 10 yards. SOURCE: Energy.gov
A solidly researched documentary on this topic is Pandora’s Promise, which covers the story of former anti-nuclear protest leaders who have come to realize that nuclear is not only safe, but is a required green technology we must embrace.
4: No Electricity Storage
Today you are likely to be shocked that the electric power industry wastes vast amounts of unused juice. It turns out that, today, there is just no large scale way to store electricity so when a natural gas power plant or a solar array or a wind farm produces electricity it needs to be used by industry or households quickly.
The matching of electricity production to demand is both a science and an art. There are so many factors going into the mix (weather, holidays, sporting events, …) that while human electricity managers use sophisticated systems, they are still guessing at how much they need to turn the knobs up or down.
The answer is grid scale electricity storage, and while it is coming soon, it is not here yet. Companies like Tesla have some early wins with old school lithium chemical batteries but the real solutions are in less obvious electrical storage technologies like:
- Massive cranes that consume (store!) electricity by stacking heavy blocks when there is too much electricity and then use mostly gravity to lower those blocks to produce electricity when we all need it.
- Giant underwater balloons that consume (store!) electricity by filling with air when there is too much electricity and then use water pressure to empty those balloons to produce electricity when needed
- So called “Green Hydrogen” is made by converting natural gas to hydrogen during times of excess electricity production. This makes green hydrogen an energy storage system. On a related note, Calgary’s Proton Technologies has now demonstrated that it is easy to produce vast amounts of ultra-cheap, ultra-clean hydrogen which will be used to replace coal and natural gas in electricity power plants.
The Inevitable Solution
Having energy crises will not encourage citizens to look to the future with green tech. As we see with the ‘overseas’ crisis today, they look to the past and demand that their old energy sources like coal and fuel oil, be turned back on. This is very bad for both green technologies and the environment.
Meanwhile back in North America, when asked what oil and gas companies are doing about the adversarial environment, Jeff Tonken, CEO of Birchcliff Energy, told Bloomberg September on 15 2021:
“Companies like ours are NOT going to grow. Birchcliff is going to take the money (from giant profits), pay all our debt down. …If you take the understanding that no-one is interested in energy, well, well that’s fine with us, because this run is going to get our debt to zero and we are going to start paying our shareholders dividends and share buybacks.
That thought, no growth, is what should make people who use oil and gas very nervous about where commodity prices are going to go. …I can tell you in Alberta, where we (have) natural gas …we’ll be warm this winter”
While price hikes and shortages hit the poorest the hardest, the coming energy crisis in the United States and Canada will be heartily felt by us all.
There is an old saying in the oil patch “The solution to high oil prices, is high oil prices”. At some point, producers and investors will be unable to resist the insanely high profits and start exploring again.
We know oil and gas is a dying industry but it is still making serious improvements to its environmental impact every day. Nuclear is even better with tremendous innovations that actually eliminate the possibility of “melt down” and produce a fraction of the waste.
How much pain should we collectively suffer through before realizing that oil and gas will be desperately needed in large quantities for decades to come?
There is no doubt the the many and varied energy crises that the UK, Europe and Asia are most acutely feeling today will hit North America in the months and years to come.
It seems many people think we are living in the year 2040 and need the policies that will make sense in 2040. We will get there but it is going to be a bumpy ride. Short periods of high energy prices will help move renewables into the main stream, but North America is setup for prolonged shortages due to the lack of investment in oil and gas.
Wind turbines, solar panels, and electricity storage will continue to get better and cheaper in the next few years. It is clear that we need to continue to invest HEAVILY in those energy segments, but we also have to keep our houses heated and children fed until the brave new green energy world is a reality.
Nuclear energy and natural gas are abundant, safe, and relatively clean. Society needs both less vilification of needed energy and individuals need to take more personal responsibility if we are going to get through this transition in one piece. A cold expensive winter or two with give all of us an unhealthy dose of reality.
The question isn’t should we transition away from fossil fuels, of course we should. The question is, how fast can that transition RESPONSIBLY completed?