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Energy - Dec 29

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Many more articles are available through the Energy Bulletin homepage.


The electric car age just got a little closer

Steve LeVine, The Oil and the Glory (blog), Foreign Policy
For the last year, Deutsche Bank's Paul Sankey, one of the best long-range energy minds on Wall Street, has been distributing a series of provocative, deeply researched, and forward-looking notes to clients under titles like "The Peak Oil Market" and "The End of the Oil Age." Last week, Sankey produced a sixth note called "2011 and Beyond -- A Reality Check." Among the takeaways: As of 2010, the new electric car age is coming upon us faster than expected -- far beyond this year's conspicuous arrival of the General Motors Volt and Nissan Leaf, and the race among the world's industrial nations to dominate this technology. Converging even more rapidly, says Sankey, are far higher oil and gasoline prices, starting in 2012. Such shifts could have enormous geopolitical ramifications -- as a consequence, some countries will become poorer, and some richer, with corresponding impacts on their global influence.

Starting with the second forecast from this 59-page report, 2010 has seen a comparatively gentle respite in an otherwise unprecedented, decade-long period of turbulence in oil markets. According to Sankey, this calm is about to break. Sankey's forecast is based on the salient factor of "spare capacity."

... nterestingly, however, Sankey sees a ray of light in this coming crisis. He classifies the consequent years-long oil price spike (peaking at $125 a barrel in 2015) as the very reason that we are at the end of the oil age. He says that heavy petroleum consumers will finally absorb the message that they must at last wean themselves off of oil, and predicts that they will begin dieting -- permanently. Because of this new consciousness, in Sankey's model global demand will peak at about 96 million barrels a day in 2020, before commencing a long, slow decline.

... Which brings us smoothly to the electric car age. Sankey blends a forecast from Deutsche Bank's automobile analysts into his note: We are in the midst of a plunge in the price of the most expensive single component of a hybrid or electric car -- the lithium-ion car battery,
(29 December 2010)



Robert Rapier's Top 10 Energy Related Stories of 2010

Robert Rapier, R Squared (blog), Consumer Energy Report
Here are my choices for the Top 10 energy related stories of 2010. I can’t remember having such a difficult time squeezing this list down to 10 stories, because there were many important energy stories for 2010. It was hard to cut some of them from the Top 10; so hard that I almost did a Top 15. But I made some difficult choices, and offer my views on the 10 most important energy stories of 2010.

... Reviewing my list of Top 10 Energy Related Stories of 2009, I see that I made three predictions. Those predictions were:

* China’s moves are going to continue to make waves
* There will be more delays (and excuses) from those attempting to produce fuel from algae and cellulose
* There will be little relief from oil prices.

... For this year’s list, don’t get too hung up on the relative rankings. They are mostly subjective, but I think we would have fairly broad agreement on the top story.

1. Deepwater Horizon Accident ...
2. The Deepwater Horizon Fallout ...
3. China Becomes World’s Top Energy Consumer ...
4. Matt Simmons Dies ...
5. Oil Prices Back Above $90 ...
6. Ethanol ...
7. Electric Cars Start Rolling Off Assembly Lines ...
8. Russian Crude Output Climbs ...
9. Militaries Acknowledge Peak Oil Threat ...
10. The IEA Recognized Peak Oil ...

Predictions for 2011

As for predictions for 2011’s top stories, I believe high oil prices will continue to put a strain on the economies of oil-importing nations. I expect that we will see oil prices once again head above $100 per barrel, although I expect the annual average for 2011 to be below $100 because of sluggish economies. I also expect that the bills are going to start coming due for some of the high profile ‘next generation’ biofuel producers, and that we will see bankruptcies from some of the companies I have discussed in this column. Some of them — probably most of them — do not have a sustainable business model, and the length of time they will be able to avoid bankruptcy is going to be solely dependent on how much cash they can manage to get infused into their operations.
(28 December 2010)



EIA Annual Energy Outlook 2011: Don’t Worry, Be Happy

Arthur E. Berman, The Oil Drum
We no longer have to worry about energy supply or prices. That is the message from the U.S. Energy Information Administration’s (EIA) Annual Energy Outlook (AEO) 2011. Cheap energy will characterize the world for most of the next decade, according to the report. Oil will not reach $100 per barrel until 2017 and natural gas will remain below $5 per thousand cubic feet (mcf) until 2022 (Figure 1).

Despite four decades of oil shocks and natural gas price spikes, the future looks stable with supply and demand comfortably balanced (Figure 2). Wasn’t it just two-and-a-half years ago that $147 per barrel oil helped push the world into the current global recession? The EIA forecast is as troubling for the smooth and gradual progression of oil and gas prices as it is for the improbably low values of those prices. The history of oil and gas price, supply and demand is characterized above all by volatility but the EIA projection does not reflect this characteristic. Don’t worry, be happy
(29 December 2010)



Renewable and fossil electricity generation costs compared

Rembrandt, The Oil Drum
To reduce fossil fuel use in electricity generation, the implementation of renewable energy is supported via subsidies or market mechanisms in many countries. These are required because the costs of renewable electricity are substantially higher than fossil fuel based power generation. In this article, the difference in cost structure is made clear by looking at the 2009 industrial and household electricity price in comparison with short-term cost forecasts for 2015 for nuclear, fossil, and renewable electricity generation.

Special attention is paid to the difference in interest rates of borrowed capital for energy projects. This has a large influence on nuclear and renewable energy costs as these require larger upfront capital investments. For example, nuclear electricity becomes cheaper than natural gas generation at low discount rates, but more expensive at high discount rates. In case of renewables at higher discount rates only onshore wind costs fall below household electricity prices in most countries, while in case of lower discount rates this is also the case for offshore wind and solar thermal electricity.

Introduction

The future electricity supply of countries is highly dependent upon making choices under uncertainty. The lifetime of a power plant is at least 20 years and can range up to 60 years, so the selection of power plant types has a long lasting effect. The costs of fossil fuel or nuclear power plant inputs is difficult to forecast as events in recent years show, and similarly is it difficult to forecast the decline in costs of renewable energy.

One of the choices that politicians have to make in the present is how to support renewable energy sources.
(27 December 2010)

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