Gas Technolution Lowers Electricity Rates For All Except Green Energy Enthusiasts

by William Yeatman on January 18, 2012

in Blog

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Great news! Thanks to the technolution in oil and gas extraction known as hydraulic fracturing, natural gas prices are ultra-cheap. Because gas accounts for about 20 percent (and growing) of the U.S. electricity supply, its bottom-rock prices have diminished utility bills nationwide. According Bloomberg’s Julie Johnsson and Mark Chediak, “a shale-driven glut of natural gas has cut electricity prices for the U.S. power industry by 50 percent.”

Alas, it’s not great news for the entire country. In those regions that have most aggressively pushed intermittent and expensive renewable energy sources like wind and solar power, utility bills are heading north, despite the gas glut.

This week, for example, PG&E, which serves much of northern California, announced the first of two planned rate hikes this year. The utility has to raise prices to comply with all the green energy mandates coming out of Sacramento, where state lawmakers have long prided themselves on being the greenest in the nation.

Austin, Texas is a bastion of progressivism and the city government owns its own utility. Naturally, then, it has spared no expense in pursuing a green energy economy. Now, citizens are paying the bill: The city’s Electric Utility Commission is deliberating on a rate hike of almost $20 a month.

Notably, these two utilities use much more natural gas than renewable energy. Austin’s fuel generation mix for FY 2009 had 27 percent gas and 10 percent renewable. PG&E’s 2010 fuel mix included 20 percent gas and 16 percent renewable. Gas provides relatively more juice, and its price has plummeted, but wind and solar are so expensive, that electricity rates increase nonetheless!

Unfortunately for Americans who live in Austin and northern California, it only gets worse. Both areas are subject to Soviet-style green energy production quotas that ratchet up annually, by law. Make no mistake: There is no economy of scale for renewable energy. The electricity grid a humungous, complex engineering project. At any given time, the electricity flowing into the grid must equal that consumed from the grid. The sun doesn’t always shine, the wind doesn’t always blow, and when these unreliable energy sources crap out, it sends grid operators scrambling to purchase backup power from reliable sources of power like coal and gas. Green energy is more expensive than conventional energy to begin with, but as its market share increases, so do its operating costs. The fact is, no city, state, or country has ever introduced significant amounts of baseload electricity from renewable power onto the grid. We don’t know if we can. What we do know, however, is that trying is going to raise rates.

Richard Burden January 18, 2012 at 5:31 pm

I’m glad that the price of gas has dropped, but no combination of chemical combustibles will ever provide the energy flux density that we need today, to bring the industrial revolution to the entire planet, and allow all 7 billion and increasing inhabitants to live comfortably and in peace. We must go nuclear!

If all of the earth’s humans were fully industrialized, the quantity of power that would require would reveal the inadequacy of coal, oil and gas in a New York minute. We would find the pollution to be a serious menace to human health and uncontrollable, and the cost of the power would quickly soar out of reach of most of the world’s population despite all the improvements in extraction techniques. We need nuclear power, with the full fuel cycle and breeder reactors, to produce massive amounts of steel and concrete, to build mammoth water diversion infrastructure, to provide fresh water, to recharge depleted aquifers, to flush out the salt out of irrigated fields, and to treat waste water adequately.

Economic pundits who denounce as “white elephants” big water diversions like NAWAPA (bring water from Alaska and western Canada to the western U.S. and northern Mexico), Mexico’s plans to capture runoff from the very wet tropical mountains south and east of Mexico City and divert it westward and northward along both coasts, Trans-Aqua (re-fill Lake Chad with water from the Congo River), or plans to divert water from Siberian rivers to re-fill the Aral Sea, are basing their judgment on the great mass of the world’s population being too poor to afford proper nutrition, personal hygiene, sanitation and medical care appropriate for a modern, educated, industrialized society. The people of Africa and most of Asia and South and Central America are being written off as unworthy of longevity and health sufficient to make higher education worthwhile.

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