When Will We Next See Cheap Energy ?

[mongers]

Supposedly the cost of natural gas in the US is lower over all. The US is drilling for so much more gas, finding large new deposits, on top of the already large reserves here.

Yes, I think that was what Tim was reference these rather speculative figures for enormous new deposits, which are as ye unproven.

Currently the US has about 4% of world natural gas reserves, Russia has six times that at 24% and both Iran and Qatar are about the 15% mark.

Incidentally, going back to US historical gas production, I looked up the figures and back in 1971 the US produced the exact same amount of 611 billion CU metres as the latest figures I have, those of 2010.

And the period in between saw pretty stable production, usually over 500 billion.

Interesting that the production shows about the same in 1971 and 2010, no big diffrences. I would not have thought that. The US must have larger reserves that 4%. That doesn't seem to make sense, given how some big name people like T Boone-Pickens has wanted the US to convert over to gas. 

I think the devils is in the detail, perhaps the methodology for US reserves is relatively conservative. And even 4% represents a lot of gas as there a hell of a lot of proven stuff out there.
Looking it up the US has enough reserves to sustain production at current rates for 12-13 years.

Incidentally about a 6th of US gas consumption comes from imports, the vast majority of which come from you know who. 

[Admiral Yi]

It's about 25% or so in the US's energy mix, which is behind oil but increasing.  It's about 40% in the UK, and I think we've been producing it for longer too.  It's not so far behind oil that its got no economy of scale - like some renewables.

Are you saying renewables do or do not enjoy scale economies?

As to monger's original question, I imagine the real price of gasoline is pretty low by historical standards.

[Sheilbh]

Are you saying renewables do or do not enjoy scale economies?

They do but they haven't (except in places like Germany) because they're not at that level yet.

[Admiral Yi]

They do but they haven't (except in places like Germany) because they're not at that level yet.

Where do you see the scale economies coming from?

[Sheilbh]

Where do you see the scale economies coming from?

What are you meaning by scale economies?  I want to make sure we're talking the same thing.

[Admiral Yi]

What are you meaning by scale economies?  I want to make sure we're talking the same thing.

Unit costs decrease as you expand production.

[Sheilbh]

What are you meaning by scale economies?  I want to make sure we're talking the same thing.

Unit costs decrease as you expand production.

Well I think the initial capital costs - which were huge - for renewables declines, which makes it more affordable way of producing energy.  The other effect of that is that it allows a far more decentralised energy system.  If it's reasonably affordable and there's a feed-in tariff system then you open up the market to a far wider number of potential energy suppliers.  I think that's happened in Germany which is now 20% renewables and growing.

Whether that's passed onto the consumer's another issue I think because of the nature of the market.  I still think the biggest thing we could do to help lower the cost of energy is to have a European Grid.  But that's not happening.

[Admiral Yi]

You amortize the fixed capital costs through depreciation Shelf.

[mongers]

Germany's position is just strange, I think it's a throw money in the air and see what happens approach; they have 44% of total world installed solar panel capacity and 14% of the worlds wind turbines, yet those and other renewables (excluding hydro and nuclear) manage to produce just 6% of German energy needs.

[KRonn]

Well I think the initial capital costs - which were huge - for renewables declines, which makes it more affordable way of producing energy.  The other effect of that is that it allows a far more decentralised energy system.  If it's reasonably affordable and there's a feed-in tariff system then you open up the market to a far wider number of potential energy suppliers.  I think that's happened in Germany which is now 20% renewables and growing.

That sounds pretty good for Germany. In the US we keep hearing about the failed solar and wind companies that received government subsidies. But my bigger question is why aren't they able to find a way to compete with other companies, other nations that are doing it? I know some nations had trouble too, like Spain and a few others which had troubles building green energy systems. But China and some other countries are doing it. I'm sure part of the problem is the costs in the US compared to China.

[Sheilbh]

You amortize the fixed capital costs through depreciation Shelf.

Yeah, I'm not sure how that affects what I've said though?

[jimmy olsen]

Germany's position is just strange, I think it's a throw money in the air and see what happens approach; they have 44% of total world installed solar panel capacity and 14% of the worlds wind turbines, yet those and other renewables (excluding hydro and nuclear) manage to produce just 6% of German energy needs.

Shelf says 20%, you say 6%, which is it?

[Iormlund]

I'm sure part of the problem is the costs in the US compared to China.

That's unlikely, since most of the cost is buying the panels themselves, usually made in China.

Solar is not really anywhere near close to be cost-effective, simply due to the primitive technology involved, which hasn't really changed that much in decades*. Wind is much closer, especially once you account for externalities like health, security and environmental costs for other sources. The problem of wind generators is they disrupt the grid's waveform. There are ways to ameliorate this, but it's costly. You also need backup gas-fired plants, for obvious reasons. And there are not that many prime sites for them. IIRC in Spain we've used up most of the best already.


* It is however ideal when dealing with places far away from the grid.

[Sheilbh]

Germany's position is just strange, I think it's a throw money in the air and see what happens approach; they have 44% of total world installed solar panel capacity and 14% of the worlds wind turbines, yet those and other renewables (excluding hydro and nuclear) manage to produce just 6% of German energy needs.

Shelf says 20%, you say 6%, which is it?

This is my source:
http://www.spiegel.de/international/0,1518,783314,00.html

[Iormlund]

Germany's position is just strange, I think it's a throw money in the air and see what happens approach; they have 44% of total world installed solar panel capacity and 14% of the worlds wind turbines, yet those and other renewables (excluding hydro and nuclear) manage to produce just 6% of German energy needs.

Shelf says 20%, you say 6%, which is it?

One might be talking about installed capacity, the other about actual generated energy. In Spain, for example, as a general rule of thumb you can expect 6 hours' worth of nominal production a day from a given solar plant.