Living in the Bad Old Days.

Baby, It’s cold outside, even in Florida

Most of you, like me, remember living through the bad old days – of the 1970s. You know unaffordable heating, waiting in line for gas  (every other day) for gas for the car and a host of other things. Not only was it uncomfortable, to most of us it felt unAmerican. And it was, this country was built on movement, and movement demands affordable energy. We didn’t really get going until the railroads started to build out the network, and then we were pretty much unstoppable.

Until the 70s, that is. A lot of people have tried to lay the blame off on the Arabs. Well, they had something to do with the proximate cause, but the real cause was right here at home. It was (and is) called the US Government.

Steven Hayward wrote about this yesterday. let’s have a look.

Everyone remembers the lines for gasoline. What is less recalled are the shortages and price spikes for natural gas, whose price and supply was also regulated at the federal level. But in Texas, intrastate natural gas outside the federal purview was abundant and cheap, and the lack of pipeline capacity to transport it, along with the price controls, meant Texas enjoyed cheap natural gas while the rest of the country shivered or paid out for expensive home heating oil and oil-fired electricity (oil-fired electricity was nearly 20 percent of the nation’s total electricity in 1973; today the figure is less than 1 percent). Hence there was a popular bumper sticker in Texas back then: “Drive fast, freeze a Yankee.”

Yep, I remember those, and like Steve says, even Jimmy Carter was able to figure out the problem, although, as usual, he had the slows in doing anything about it. But Reagan didn’t, those controls ended his first week in office. It’s one of the reasons for the 80s boom.

But the Northeast still hasn’t figured it out, and so its residents are freezing in the dark again. From Steve.

But from the looks of things the northeast is living back in the bad old days during the current bout of global warming climate change gripping so much of the country. The spot prices for natural gas and electricity are soaring:

Gee—how can natural gas be so expensive when its abundant and cheap (thank you fracking), and moreover available in nearby states like Pennsylvania and Ohio? It’s not necessary any more for eastern natural gas customers to have to deal with those cowboy hat-wearing folk in Oklahoma and Texas.

Ah, maybe headlines like this have something to do with it:

He’s blocked 3 (at least) pipelines, although the Federal Energy Regulatory Commission has overturned him on one. He’s also stopped fracking in New York, depriving upstate and western New York of who knows how many jobs, good paying ones too. In fact, so good that western Pennsylvania and eastern Ohio are all but booming again. The Wall Street Journal (Paywall, sorry) took this nonsense apart last summer

The U.S. shale boom has lowered energy prices and created hundreds of thousands of jobs across the country. But those living in upstate New York and New England have been left in the cold by New York Gov. Andrew Cuomo, whose shale gas blockade could instigate an energy crisis in the Northeast. . .

All of this is ominous since the region desperately needs more natural gas to make up for lost power from the impending shutdown of nuclear and coal plants. New England’s Independent System Operator projects that 14% of the region’s electric generation capacity will be retired within three years and says more pipelines are needed for grid stability.

Energy costs in the Northeast are already the highest in the nation outside of Alaska and Hawaii in part due to the shortage of natural gas. Northeast residents pay 29% more for natural gas and 44% more for electricity than the U.S. average, according to a recent study by the U.S. Chamber of Commerce. Industrial users in the Northeast pay twice as much for natural gas and 62% more for electricity. . .

Inclement weather can cause energy costs to skyrocket. During the 2014 polar vortex, natural gas prices in New York City spiked to $120 per million Btu—about 25 times the Henry Hub spot price at the time. Natural-gas power plants in New York are required to burn oil during supply shortages. Due to pipeline constraints and the Jones Act—which requires that cargo transported between U.S. ports be carried by ships built in the U.S.—Boston imports liquefied natural gas during the winter from Trinidad. This is expensive and emits boatloads of carbon.

Speaking of which, about a quarter of households in New York, 45% in Vermont and 65% in Maine still burn heating oil—which is a third more expensive than natural gas and produces about 30% more carbon emissions per million Btu. Yet many can’t switch due to insufficient natural gas and pipeline infrastructure.

So what is Cuomo doing about this? This:

New York Governor Andrew Cuomo, in connection with his State of the State address today, announced a plan to create new energy efficiency targets and appliance standards. He directed the state’s Department of Public Service and the New York State Energy Research and Development Authority (NYSERDA) to propose new 2025 energy efficiency targets by Earth Day, April 22, 2018, and also announced the state’s plans to develop new appliance efficiency standards for products not covered by federal standards, coordinating efforts with other states. According to the Governor, the targets will be “achieved through cost effective implementation strategies and innovative approaches from both utilities and the [New York State] Clean Energy Fund.”

Yep, that’ll fix it. Make appliances even more expensive and less reliable.

Steve writes, “Turns out the New England electricity grid manager (the ISO) warned of this very problem a couple months ago:”

[P]ower system operations could become challenging if demand is higher than projected, if the region loses a large generator, electricity imports are affected, or when natural gas pipeline constraints limit the fuel available to natural-gas-fired power plants. . .

While New England has adequate capacity resources to meet projected demand, a continuing concern involves the availability of fuel for those power plants to generate electricity when needed. The region’s natural gas delivery infrastructure has expanded only incrementally[thank you Gov. Cuomo], while reliance on natural gas as the predominant fuel for both power generation and heating continues to grow. During extremely cold weather, natural gas pipeline constraints limit the availability of fuel for natural-gas-fired power plants. Further, the retirement of a 1,500 MW coal- and oil-fired power plant in May has removed a facility with stored fuel that helped meet demand when natural gas plants were unavailable. . .

To address potential shortages of fuel to generate electricity, ISO New England will administer the Winter Reliability Program again to help protect overall grid reliability. The program provides incentives for generators to stock up on oil or contract for liquefied natural gas before winter begins . . .

But, what about all that solar power we keep hearing about?

While PV helps reduce energy consumption during sunny winter days, demand peaks in winter after the sun has set.

Typical. I’d feel sorry for them, but I just can’t manage it. After all, they elected these statist cretins, and the chickens are coming home to roost, good and hard. I’d invest in tar and pitchforks futures though unless they all do freeze in the dark. But they’ll probably re-elect them again. It’s what they do, and why they have become increasingly irrelevant to the modern world.


Elections Have Consequenses

BN-KN997_negas0_M_20150929190135Keep that in mind if you live in New England this winter. While you’re freezing in the dark because of high energy prices, the rest of us are enjoying some of the lowest prices in a generation,

Why? Quite simply because we like fracking, and gas pipelines, and you don’t. From the Wall Street Journal.

Natural gas is so abundant in much of the U.S. that producers want to export it overseas. But in New England, gas is so hard to get that companies are importing it from as far away as Yemen.

Natural gas is so abundant and cheap in much of the U.S. that producers want to export it overseas. Except in New England, where gas is so hard to get that companies are importing it from as far away as Yemen.

The U.S. shale boom that has produced a glut of gas—and helped lower many Americans’ home heating bills—has largely bypassed the energy-starved New England. Few pipelines are available to ferry gas from Pennsylvania and Ohio to Connecticut and Maine, and new lines proposed in the region won’t go into service until 2018, or later.

Gas plants currently supply 44% of New England’s electricity, up from just 18% in 2000. Consumers and businesses are also swapping their old furnaces that burn heating oil for newer models that run on gas.

So as the weather cools, problems loom.

When brutal cold hits this winter, energy prices will soar. In Massachusetts, the residential gas price was $14 per thousand cubic feet last January, more than 50% above the national average, according to the U.S. Energy Department. At nearly 21 cents a kilowatt-hour, average first-quarter home electricity prices in New England were two-thirds higher than the U.S. average, federal data show.

Source: In New England, Shale Gas Is Hard to Get – WSJ

Oh, and it’s supposed to be snowier and colder than normal this year, so you can’t even count on global warming to keep your butt warm.


Eagle: Resurgent

You know it’s funny, one goes along bemoaning the state of everything, getting depressed, believing the country is going to hell in a handbasket, and all of a sudden one morning your inbox is just running over with good news. I can’t speak for y’all, but I live for those days. Today is one of them.

First, I’ve seen from a couple of sources that America is suddenly becoming competitive in manufacturing again. This is happening for several reasons. From the Telegraph, UK

Assumptions that the Great Republic must inevitably spiral into economic and strategic decline – so like the chatter of the late 1980s, when Japan was in vogue – will seem wildly off the mark by then.

Telegraph readers already know about the “shale gas revolution” that has turned America into the world’s number one producer of natural gas, ahead of Russia.

Less known is that the technology of hydraulic fracturing – breaking rocks with jets of water – will also bring a quantum leap in shale oil supply, mostly from the Bakken fields in North Dakota, Eagle Ford in Texas, and other reserves across the Mid-West.

“The US was the single largest contributor to global oil supply growth last year, with a net 395,000 barrels per day (b/d),” said Francisco Blanch from Bank of America, comparing the Dakota fields to a new North Sea.

Total US shale output is “set to expand dramatically” as fresh sources come on stream, possibly reaching 5.5m b/d by mid-decade. This is a tenfold rise since 2009.

This is on the order of the North Sea fields (at least). We are looking at becoming completely energy independent. And without government subsidies. Continuing:

The US already meets 72pc of its own oil needs, up from around 50pc a decade ago.

“The implications of this shift are very large for geopolitics, energy security, historical military alliances and economic activity. As US reliance on the Middle East continues to drop, Europe is turning more dependent and will likely become more exposed to rent-seeking behaviour from oligopolistic players,” said Mr Blanch.

Manufacturing is coming home as well for a variety of reasons as well.

Meanwhile, the China-US seesaw is about to swing the other way. Offshoring is out, ‘re-inshoring’ is the new fashion.

“Made in America, Again” – a report this month by Boston Consulting Group – said Chinese wage inflation running at 16pc a year for a decade has closed much of the cost gap. China is no longer the “default location” for cheap plants supplying the US.

A “tipping point” is near in computers, electrical equipment, machinery, autos and motor parts, plastics and rubber, fabricated metals, and even furniture.

“A surprising amount of work that rushed to China over the past decade could soon start to come back,” said BCG’s Harold Sirkin.

The gap in “productivity-adjusted wages” will narrow from 22pc of US levels in 2005 to 43pc (61pc for the US South) by 2015. Add in shipping costs, reliability woes, technology piracy, and the advantage shifts back to the US.

Made in America, Again. Has a nice ring to it, doesn’t it?
from CNBC:

Boeing posted a larger quarterly profit Wednesday that topped analyst forecasts on strong operating margins and the company upped its profit forecast for 2011.

This from the Enterprise Blog reinforces (in fact: references) what the Telegraph says:

1) The widespread perception is that America is in decline. The reality may be that the best is yet to come. That’s because America is rapidly developing very cheap domestic sources of energy. At the same time, the relative cost of labor is declining in the U.S. as it rises more rapidly in China. These two developments are already starting to reindustrialize America. They are also likely to change the political dynamics in the United States as booming oil and gas industries favor conservatives in the new oil states such as Pennsylvania and Ohio. There may be fewer blue and red states, and more in the black, which happens to be the color of oil.

2) Let’s begin in Youngstown, Ohio. That’s where Vallourec & Mannesmann is building a new $650 million steel mill that will employ 400 construction workers and create as many permanent jobs. The company isn’t getting a subsidy from the government to do this. Rather, Ohio is experiencing an energy boom as new “fracking” technologies permit tapping into huge reserves of oil and gas embedded in shale. The new steel plant will build steel tubes for the energy industry.

Read the rest.

In the Wall Street Journal‘s editorial page says that unemployment may begin improving.

Even after 103,000 jobs were added during September, unemployment remains at 9.1%. Counting those who have given up the job search or accepted a part-time job, economists calculate actual unemployment at a staggering 16.5%. Where will the growth come from that can help get people back to work?

One source is the natural gas industry, which is already generating jobs by the thousands, all without government subsidy. And it can generate even more, if we unleash this resource’s full potential.

More than 600,000 Americans already explore, produce, store and transport natural gas, according to consultancy IHS Global Insight. For example, …

Read the rest. subscription required

The Gallup Management Journal says that unemployment can only be solved one city at a time.

If you were to ask me, “From all the data you have studied so far, where will the next economic breakthrough come from?” my answer would be: From the combination of the forces within big cities, great universities, and powerful local leaders. Those three compose the most reliable, controllable solution. Their combined effect is the most predictable solution to America’s biggest current problem, which is winning the global war for good jobs.

Economic booms originate in the souls of individuals and great cities.

The cornerstone of these three is cities, especially America’s top cities. All cities count and can contribute. But so goes the leadership of the top 100 American cities, so goes the country’s economic future.

Emphasis mine

Continue reading

And in a study from Wolverine U, via the Atlantic, we find that Gen X turned out all right.

Maybe, soon we can say, “Welcome to the American Century, version 2.0”.

Yeah, I know, we’ve still got lots of problems. There’s the EPA, as we know. Gallup reports that small business owners think (they’re right) that complying with government regulations is the biggest problem we’ve got.

Oh, and WaPo realized that Barack Obama isn’t Harry Truman. Pretty good for the WaPo, it only took three years.

Hattips to Ben Domenech and Melissa Clothier

Quote for the day via The Transom

“Far better is it to dare mighty things, to win glorious triumphs, even though checkered by failure… than to rank with those poor spirits who neither enjoy nor suffer much, because they live in a gray twilight that knows not victory nor defeat.” — Theodore Roosevelt

Have a great evening.

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