Monday
Feb082016
by 
Bishop Hill
Bishop Hill Energy policy isn't working
Feb 8, 2016 Climate: Parliament Energy: grid ;)
When oil and gas prices were high, DECC used to publish an annual Energy Statement, which included an assessment of the impact of policy measures on prices.
John Constable notes that now that fossil fuel prices have crashed, DECC has decided that the statement is no longer necessary. It's hard to see this as anything other than an attempt to hide the disastrous impact of the government's approach.
Apparently, in the last assessment it was said that in a "low-price" scenario, policy measures would be increasing prices by up to 77% for some users. Given that fossil fuel prices are far below those assumed in that scenario, that could easily be more than double.
Reader Comments (35)
You wonder how much of the deception is due to the green Sir Humphreys who actually run energy policy. I bet the Government Ministers have no idea of what the civil servants are doing, because, with their PPE qualifications, they don't have a clue about energy.
So, Philosophy, Politics and Economics is changing into 'Let's all whistle nonchalantly, and maybe they won't notice?'.
Since they modelled a world with zero installation costs and infinite equipment lifetimes it was of zero value even as propaganda.
Now is a good time to stockpile some Strategic Reserves of wood and heating oil.
Apologies, I got it wrong. Of the three DECC Ministers, one studied political science, one history and one law. Not a full-blown PPE in sight.
The madman Miliband, Jailbird Huhne and Away with the Fairies Davey leave us a disastrous legacy in the name of their lunatic renewable ideology....
How many hospitals could be funded by scrapping the DECC?
Would there be howls of protest if the DECC was scrapped?
Would anybody miss the DECC?
Baul out the DECC for constant folly,
Fa la la la la, la la la la
What is often forgotten is that many of the policy measures imply large scale spending by consumers anyway - often on completely uneconomic measures. They may not be spending on energy, but they're being asked to waste money on insulation, complex "energy efficient" appliances that have limited lives compared with their predecessors (e.g. modern boilers), etc. It's not just the subsidies to unreliable energy sources - it's the cost of implementing the policies laid down by DECC and the EU. You could add in the added maintenance costs from using bio fuels in vehicle engines etc. as well.
Through the DECC, various governments have been gambling with our taxes and we are not talking ten quid on the 2.30 at Newmarket here. However they did not lose; we did.
I attended the Oil and Gas Authority (OGA) conference last week. The OGA is becoming the executive part of UK government oil and gas, in other words government is quietly (and I would say, effectively) taking action over preserving the oil and gas industry in this country and removing it from DECC. So scrapping DECC would be good, but definitely you cannot scrap the OGA ( which is the proper part, of regulation, licensing etc that government needs to run an Oil and Gas industry).
Regarding the idea that the industry is overseen by a bunch of "Yes Minister" types, well there may be some, but a quick check of the Petroleum Exploration Society of GB members list who are listed as OGA (and this will only be those who are PESGB members, not all of them), shows there are plenty of qualified professionals working there. The job titles include:
Exploration Manager
Senior Production Geoscientist - SNS & IS
Senior Geoscientist
Senior Geoscience Data Manager
Senior Geoscientist - SNS & IS & Land
Manager of D & P - SNS & IS
Senior Exploration Geoscientist - AM, MF & NNS Exploration
Senior Exploration Geoscientist - CNS Exploration
Senior Mapping and GIS Manager
Team Leader Exploration Road Map
Director E&P
Senior Geologist - NNS Fields
Adding some juniors who may not be listed, that's enough technical staff for a moderate sized oil company presence in the UK.
I can also say first hand that they include some very capable technical presenters.
(Acronyms: SNS = Southern North Sea; IS = Irish Sea; CNS = Central North Sea; AM = ?; MF = Mature Fields?
DECC's Sept 2014 price projections on page4 for 2016 - 2016 - Low 88.5, Central 92.5, High 125.4 (All prices are in 2014 US dollars per barrel):
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/360598/DECC_2014_fossil_fuel_price_projections.pdf
"You wonder how much of the deception is due to the green Sir Humphreys who actually run energy policy. I bet the Government Ministers have no idea of what the civil servants are doing, because, with their PPE qualifications, they don't have a clue about energy." Reminds me of one of them (A. Rudd) wanting to meet up with Lord Lawson to "re-educate" him. Never heard of the outcome of this meeting, but whatever Lord Lawson told her cannot have had any lasting effect.
Maybe she should organise a secret meeting with Phillip Bradby for some edification.
Prices have crashed because the velocity of money has crashed.
The banks are desperate to inflate the price of oil using the most efficient means at their disposal.
Almost all the remaining credit issued in peripheral Europe is being directed toward the car Industry.
This in turn is making basic products unaffordable as all modern goods require at least some oil input.
Less and less energy is being used for basic production and consumption and a higher % of Tfc is directed into transport.
As people become poorer oil gets more expensive relative to their dwindling cashflow even as the $ price collapses.
Friday's BBC prog the Bottom Line had a panel of of 3 Renewable subsidy mafia guys..They are probably responsible for DECCs rubbish estimates
On the prog they spouted very questionable figures the with PR slick confidence. They brushing aside of David McKay's "Renewable Energy - without the hot air" book as obsolete and "out of date" yet his estimates were probably better than theirs were.
They got very excited about REPOWERing the way a wind farm is rebuilt after "20 years" (Their number !)
ie wholly stripped down and replaced by bigger turbines (min 25:35)
Yes windfarms are rebuilt every 20 years : How RENEWABLE is that ?
"But what is inflation? The usual response is "an increase in money supply." Uh, not really.
Remember the basic economic equation: MV = PQ
That is, Money (and credit) * Velocity (how many times each "turns over" in a given unit of time) = Price (of each thing or service produced) * Quantity (how many things or services are produced)
This is an equation, which means it always balances. It must, by definition.
So what does a negative rate do? It decreases "M". That is, if you deposit funds over time you have fewer of them.
But wait -- the goal is to increase M*V -- that's "inflation."
So why do it?
Because you are trying to force up "V" -- velocity. That is, you're trying to force those with money to put it into the economy, and keep it there; that is, remove it from said deposits (or the mattress) and spend it.
But why would you do that? You'd only do that if you believed spending it would benefit you -- either as an investment (that is, you can spend some money in the expectation of producing even more as a consequence) or out of pure consumption.
But you will only invest if you believe the future is bright; that is, that your investment will pay off.
What does a central bank that invokes desperate measures such as this tell the market?
It tells the market the future sucks and so we're going to try to force you to behave as we wish."
Karl Deninnger - The Market Ticker Jan 31 2016
So the policy response is to subtract your deposit over time (Demurrage) and at the same time issue the most wasteful credit imaginable (consumer credit for cars)
Demurrage on its own might be fair means of managing society but its use in conjunction with bank credit is devastating .
Orson Welles classic interview of Lael Tucker (1955 Basque country)
The elite were very aware of the problems building within society 60 years ago.
Miss Tucker choose to take her kid out of the American maelstrom for over good reasons .
https://m.youtube.com/watch?v=TCZi8pbdTgw
What is the annual operating cost of a large hospital?
Assuming €1 million per inpatient bed to build a new major acute teaching hospital
€577,000 for each bed in a newly-built major regional hospital
€187,500 per bed providing new inpatient beds by extending an existing major teaching hospital
€700,000 per bed annual operating costs (€1,917 / day x 365)
http://www.irishhealth.com/article.html?id=12919
How does it compare with the GBP4.9 - 7.6bn surcharge projected with oil at a low of $88 / bbl?
Seems the annual surcharge would be in the region of funding the build and operation of 5,000 to 10,000 hospital beds (please check my maths).
Roughly, with WTI oil trading below $30/bbl how does this surcharge scale? Is it 2x, 3x? Is it capped at GBP7.6bn?
How much of the Projected New Build budget is now committed expenditure?
@ 3:46 PM stewgreen
Last Septembre, here in rural France, the local windfarm had an open day to mark its opening. I had the opportunity to talk to one of the Engineers (Engineer to Engineer). He told me that the company had a 20 year lease of the land with a possibility of extending it to a maximum of 30. More interesting was that the local electricity company had only signed-up for m15 years.
What do the local electricity company know ?
I have noticed that after a good "blow" at least one of the windgenerators is/are stationary. When passing, I often see the white van of the Technicians at the base one or another tower. It is often said that windfarms do not produce permanent jobs. The two Technicians seem to be the exception.
Surely time for an FOIA request for an estimate of how much money Green energy is currently 'saving'...?
One would think the poor taxpayer has a right to know why they're still paying for renewable subsidies in the face of what should be reducing energy costs. Is there no one there in the govt that will man up to answer the obvious??
stew
"windfarms are rebuilt every 20 years"
Renewable all over again, then!
Although won't a bigger turbine require more height, bigger foundations, fatter cables, etc..?
Be aware, Tomorrow the BBC woman's hour on News 24, otherwise known as Victoris Derbyshire, is attacking fracking. It will contain things you really need to know about fracking if you live near the Cuadrilla site in Lankashire.
Thinking scientist: AM would be "Atlantic Margin" i.e West of Shetland.
thinkingscientist:
kellydown is correct.
AM Atlantic Margin (includes deep water Faroe-Shetland Basin & Rockall Basin)
MF Moray Firth
NNS Northern North Sea
The public may not have the numbers, but DECC and their paymasters do. Nobody likes the excessive troughers. There is resentment for the others sweet deal they don't share, and the embarrassment of being perceived a collaborator without benefits. If oil prices stay low too long, something will give
And SFA is the prospect of prices rising significantly IMG the next few years.
If only the bureaucratic overburden would shed jobs as quickly as the operator and service companies have done.
"So called renewables"
..So the wind is free but the wind farm is REPOWERed every 15-20 years by completely rebuilting it with bigger/better turbines.
(I was going to link to the NTZ story talking about offshore wind maintenance costs adding up 100X construction cost. However that figure comes from an institute looking for funding for a project to develop cheaper maintenance solutions and they don't substantiate it.)
Shouldn't "renewables" be called "unreliables"?
Wind is free, sun is free - just like oil, gas & coal in the ground are free.
Turning them from potential into usable energy is where the cost is and the first two are not remotely near being either as usable or cheap as the latter three.
You'll know "renewable" energy is a "sustainable" proposition when the government hits such companies with a massive windfall tax like they do periodically to oil & gas companies when profits go up.
When you're happy to get a renewable-powered ambulance to a renewable-powered operating theatre for a life-saving operation.
When you're reading this on a renewable-powered and built computer via a renewable-powered internet.
And so on. You know it's never gonna happen with wind and solar so why do we keep pouring public money into the pockets of these scammers?.
Kellydown said: "... why do we keep pouring public money into the pockets of these scammers?"
Good question. The literal answer is - we don't, it is the politicians who do. And the reason the politicians do is because they can.
Politicians in general are no better at guessing what will work than the rest of us. Politicians also tend to be transfixed by ideologies - they like the idea of "changing society for the better", "leaving a legacy" and so on. They are so enthusiastic for their latest idea (ie wheeze) that they have little grasp of the law of unintended consequences. That combination costs us money. Politicians spend our money freely on their wheezes precisely because it is not their own money.
The only solution is that politicians should be prevented from re-modeling society to suit their whims, and prevented from guessing what will work. Their job is to provide a framework of transparent and equable law and regulation, something which they actually don't do too well, and leave the rest of us to do our jobs thereby providing a market solution.
One example of the stupidity of our energy policies is that when the wind is too strong wind turbines can catch fire. That happened yesterday to a wind turbine near Pontyates between Llanelli and Carmarthen. It does not seem to have attracted much attention in the media but there is a very brief story in the Carmarthen Journal.
Firefighters battle wind turbine fire near Pontyates
http://www.carmarthenjournal.co.uk/Firefighters-battled-wind-turbine-near-Pontyates/story-28692890-detail/story.html
The reaction of renewable energy "experts" when a similar fire occurred in Scotland a few years ago is interesting.
Storm caused wind turbine fire, BBC 9 December 2011
http://www.bbc.co.uk/news/uk-16115139
Renewable energy experts today dismissed an incident where a wind turbine caught fire in gale force winds as a "freak" occurrence.
Of course we should expect far more of these "freak occurrences" as a result of climate change - or rather our reactions to it!
Well, why not? It's perfectly apt. Renewable. Windmills are where sustainability and renewability form turbulence.
======================
stewgreen
"Yes windfarms are rebuilt every 20 years : How RENEWABLE is that ?"
It's far worse than that. Main bearings are replaced every twelve months or so. If a windmill isn't turning it's almost certainly broken. Stationary blade axles crush the main bearing so they are kept moving by power from the grid.
Don't blame DECC rank and file - they have to do what their ministerial and DG bosses tell them, even when they think it is scientifically and economically balderdash.
To be sure there are some true believers in the ranks, mostly on the climate change side (they would not be appointed or promoted if there was any doubt about that), but few of the technically competent OG team mentioned above are in that camp.
PS - I now that our vastly expensive wind farms are churning out about 700 MW of electricity v 10 GW from our remaking coal-fired stations and 20GW from gas. Someone needs their head examining!