Lando 
Posted on 09/28/2005 9:54:14 AM PDT by Lando Lincoln
It's no secret that Hurricane Katrina did awful damage to the Gulf Coast region and the US energy infrastructure in the Gulf. A lesser known casualty of the storm has been the thinking of many politicians and pundits. Some of them are now calling for destructive economic policies such as price controls and time-wasting initiatives such as investigations into allegations of profiteering.
With Hurricane Rita bearing down on the Gulf today, let's review some of the facts surrounding Katrina and energy prices to understand what's happened and what we should be doing - and not doing - in response.
In the year before the Katrina hit, gasoline prices rose $0.50 per gallon, and politicians and reporters remained calm. They knew the rise was due to many factors, including booming Chinese, Indian and world-wide demand; lack of excess production capacity; rising US crude oil inventories; US refineries running at peak capacity; uncertainty about Iran, Iraq and Venezuela; high US summer demand; and other causes. But there was no "crisis." Logic and calm prevailed.
Then the storm smashed the US energy infrastructure as badly as it damaged cities, homes and lives. Consider the following facts, available at www.eia.doe.gov
So at the height of the summer driving season, Katrina shut down platforms producing one-sixth of US domestic oil production; and LOOP, which throughputs 30% of US oil imports. She damaged handling facilities and refineries that process almost one-half of our domestic and foreign oil; and the tank farms and pipelines that move most of that oil and gasoline to the US Northeast and Midwest.
This damage compounded the "non-crisis" causes. The result was that the world price of crude oil topped $70 per barrel for a short while. The US average price of gasoline hit $3.05 by September 1 -- up $0.70 from August 1 and $1.20 from year-earlier levels (although as facilities come on, prices have begun to drop).
Politicians and journalists who understood and explained earlier gasoline price hikes totaling $0.50 suddenly found it incomprehensible that anything could increase prices by another $0.70. They saw no connection among Katrina, the damage, supply cutoffs and the price increase.
They knew that prices rose since 2004 because of supply and demand in a world market; they should figure out that losing 16% of US crude oil production could cut US and world crude oil supply and raise prices.
They knew that US refineries had been at full capacity for years; they should figure out that damage to, and shutdown of, six major refineries could make a big difference in US gasoline supply -- and US gasoline prices.
They knew that the US imports more than half of all the oil that Americans use; they should figure out that closing LOOP and losing 8.5% of US crude oil imports would make a difference in total US crude oil supply. And they should figure out that damage to onshore petroleum receiving facilities in New Orleans, Biloxi, Mobile and other major Gulf ports could make a huge difference to total US supply, as could damage to the pipelines that move crude oil and product around the country.
Finally, they should figure out that each of those things has some impact on costs to consumers; the combined impact is inescapably large.
But critics apparently see no connection between damage, shortages and price increases, so they want "solutions." Senator Maria Cantwell (D-WA) wants the Federal Trade Commission to investigate so-called "price gouging." Senator Byron Dorgan (D-ND) is introducing a bill to tax energy companies' profits. The state of Hawaii has already instituted price controls on energy and other states are considering similar measures.
The politicians' desire to do (or say) something prevails over logic and information. The proposals are a disservice to the nation. Americans would understand the issues if they were explained, as was the case for the price changes the year before Katrina.
President Bush used the Strategic Petroleum Reserve to ease supply pressures. He proposes to site refineries, nuclear plants and Liquefied Natural Gas plants on closed military bases. That could speed permits, diversify energy sources and cut down on "Not In My Back Yard" arguments. Senator George Allen (R-VA) wants to suspend gasoline regulations to eliminate "boutique" fuels. That could introduce efficiencies into the worst supply bottlenecks.
Neither proposal will satisfy critics who call for non-solutions and blame those who disagree. They want the spotlight, not answers. That's pandering, not policy.
The author is a consultant on domestic and international energy, security and trade issues.
Lando
Thanks for a most excellent does of sanity on this topic.
No new nuclear plant was built in the last 20 (or 30?) years, and none was planned through 2020. Only replacement units were allowed. No reason why we can't do better.
http://www.aboutnuclear.org/view.cgi?fC=Electricity,Global_Map_of_Nuclear_Power_Plants
Statistics issued by the Power Reactor Information System of the International Atomic Energy Agency indicate that in 1999 436 nuclear power plants operated in 32 countries around the world. Included in this number were 104 plants operating in 30 states in the U.S.
While the U.S. can boast about having the most nuclear power plants, electrical power from this plants provides less than 20% of all power supplied in the U.S. Other countries are much more dependent on nuclear than the U.S. The next figure ranks the per capita supply of nuclear power for the top 15 nuclear power generating countries. For 1999 nuclear energy represented about 75% of total electricity production in France, 58% in Belgium, 47% in Sweden, 43% in South Korea, 38% in Hungary, 36% in Switzerland, 31% in Germany, 36% in Japan, 33% in Finland, 30% in Spain, 29% in the United Kingdom, 20% in the Czech Republic, 19% in the United States,13% in Canada, 5% in Mexico, and 4% in the Netherlands.
More from this PRO-NUCLEAR site: http://www.aboutnuclear.org/view.cgi?fC=Electricity,Benefits_^_Effects
Safety:
The nuclear power plant accidents at Three Mile Island in the United States and Chernobyl in Ukraine are well known; however, despite these incidents, nuclear power has a remarkable record. About 16% of electricity generated around the world comes from nuclear power, and in the last forty years of this production, not one single fatality has occurred as a result of the operation of a civilian nuclear power plant in the United States, Western Europe, Japan, or South Korea. According to the U.S. Bureau of Labor Statistics, in the year 2000, the nuclear industry's safety accident rate-which tracks the number of accidents that result in lost work time, restricted work or fatalities-was 0.26 per 200,000 worker-hours. By comparison, the accident rate for U.S. private industry was 3.1 per 200,000 worker-hours in 1998 (the most recent year such data was available).
Economics and Reliability:
Nuclear power plants are one of the most economical forms of energy production. Nuclear fuel costs (as a function of power generation potential) represent only a fraction of the cost of fossil fuels. Including capital and non-fuel operating costs, the cost of operating a nuclear power plant is roughly equivalent to fossil fuels. Recently, the average electricity production cost for nuclear energy was recognized as the cheapest source of electricity. In 1999, the average cost of power generation by nuclear plants was 1.83 cents per kilowatt-hour, for coal-fired plants 2.07 cents, for oil 3.24 cents, and for gas 3.52 cents. Costs for solar and wind are still well beyond that considered to be competitive to the public.
The cost of regulation and industry oversight of nuclear power generation is substantially more than that of other power generation sources; however, improvements in reliability and operational and maintenance efficiencies have contributed to reducing those costs. Currently, nuclear power plant capacity factors average over 75%. This is competitive with those of fossil fired plants. Most plants are designed to operate in a base load configuration; that is, they run at full power regardless of the demand on electricity. Nuclear power plants are particularly well suited for this purpose since they are designed to produce large quantities of power and can sustain operation for up to two years without refueling.
I can't stand these people. I just can't stand them.
Fortunately, President Bush and the Republicans may be about to do something good (for a change): loosen environmental regulations on the oil industry. Imagine: we could see offshore drilling in Florida, and maybe even new refineries being built.
"Fortunately, President Bush and the Republicans may be about to do something good (for a change): loosen environmental regulations on the oil industry. Imagine: we could see offshore drilling in Florida, and maybe even new refineries being built."
Keep loosening the restrictions on nuke power. Nuke power can create the energy we need en masse to convert raw organic products into biodiesel. Once biodiesel is a market of it's own, we decrease market demand for foreign petrol and the price for those products decrease. Gives us independance and eventually a product we can export for profit.
Good common sense article on oil.
About nukes ... very good.
The price hikes is a good warning sign, it might shake us out of bad policies, just as much as scaring us into good policies.
OUR CHOICE.
If we want this country to be a rich and prosperous nation, we will need to have the lowest energy costs and the best energy system.
Energy and ideas is what makes any economy tick. We need more of both.
I don't see anything that should prevent SAFE use of the nuclear power. There is an understandable hesitance and fear of using it. But its like fear of flying, even when statistics show that its safer than car travel. Nevertheless we both fly and drive.
Hysteria can be overcome with good information.
Even the issue of spent nuclear fuel is overblown. The total space needed for secure burial of that really bad stuff is minuscule. It can be buried forever and deep in sarcophagus of 10 times more than needed size and still take practically no space.
Full disclosure: I never worked for nuclear industry and have no financial interest in it.
A multitude of oil refineries have been dismantled, and I believe some nuke plants have been shut down as well.
Most electrical power generating plants have been converted from coal to Natural Gas, which has increased the demand on that energy source as well.
I was a grad student studying Uranium Mineralogy, dropped out and went to work in the oil industry, in the spring of 1979.
But then, the last time he showed up out here in an off election year that I saw him, was to do the presentation (disguised as a hearing) before they shut down the doppler radar at Williston.
Dittos on all you say.
Nuclear power can address global warming, high energy prices and energy dependence woes ... and keep capitalism humming.
I think the nuclear power opponents are really opponents of the success of our economy.
"Dorgan (D-ND ) would remove the development capital from the oil companies before they get it."
Why does North Dakota elect such a useless suck-up to liberal special interests???
I think the nuclear power opponents are really opponents of the success of our economy
Safety is paramount. But after that, environmentalists are more anti-progress or anti-capitalists. There is no other explanation.
Because there is no real, working power source that is greener than nuclear (solar power has the potential, but not there yet); and in absence of nuclear power we continue to rely on the burning fossil fuels. Its not what they want is it?
"Safety is paramount."
It is, but the nuclear power industry has had a track record for 40 years of zero deaths from nuclear power.
Safer than any other industry out there, including refineries, which just last this summer had a serious accident that killed several.
"Because there is no real, working power source that is greener than nuclear (solar power has the potential, but not there yet); and in absence of nuclear power we continue to rely on the burning fossil fuels. Its not what they want is it?"
A telling point is that the environmentalists in the Kyoto accord insisted that other 'renewable' energy sources would give a country 'credit' on greenhouse gas reduction BUT NOT NUCLEAR. In other words, having zero CO2 emissions is not enough, it has to be the 'right' kind of zero-emission power generation. They didnt want the global warming scare to be used to help nuclear power ... does that make any sense? Nope, unless your agenda is something *other* than CO2 emissions reductions. Humbug.
Farm subsidies. (although claims of 'saving' family farms somehow keep getting creedence as farms disappear).
Aging Demographic: social security.
In a nutshell: the elderly, farm, and city porkbarrel votes leave the rest of rural ND wishing in one hand and watching the other one fill up.
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