If politics makes for strange bedfellows, few issues make for more peculiar sleeping arrangements than that of distributed energy. There aren’t many others that put former Republican congressman (and son of “Mr. Conservative” himself) Barry Goldwater Jr. on the same side as the Sierra Club.
.. The conflict scrambles political loyalties because it goes back to competing visions from the beginning of electrification. When Thomas Edison drew up the plans, the electrical grid was envisioned as a highly decentralized affair, with small power plants in each neighborhood. But with the advent of alternating current, it became possible for much larger plants to supply power over great distances.
.. They face competition from Consumers for Smart Solar—allied with Americans for Prosperity—which has submitted its own ballot measure for 2016 that uses similar-sounding language but would in fact codify the existing practice whereby homeowners can only sell excess power back to the utilities themselves. Major Florida utilities Florida Power & Light, Tampa Electric, Gulf Power and Duke Energy have contributed nearly $2 million to Consumers for Smart Solar.
.. But net metering schemes tend not to acknowledge that the price of electricity reflects not only the cost of generating the power but also the cost of building and maintaining the grid. Reimbursing homeowners at the full retail rate of electricity acts, effectively, as a subsidy.
.. The situation is roughly analogous to electric cars not paying for road repairs via the gas tax. A few electrical cars are fine, but what happens when most cars on the road aren’t paying?
.. Ultimately, what scares utilities most about distributed generation is the danger it poses to their monopoly over electricity generation. Shielded from competition for more than a century, utilities regard any technology that moves the grid back toward a more open and decentralized system as an existential threat.
Russians’ Anxiety Swells as Oil Prices Collapse
Food prices rose 20 percent last year, according to official statistics, but often Russians say their grocery tab is up by a third or more, thanks in part to sanctions Moscow slapped on Western food imports in retaliation for sanctions the West imposed over Ukraine.
.. Russia has around $360 billion in foreign currency reserves and some $120 billion in two rainy day funds, down from just under $160 billion a year ago. At current spending rates, however, the two funds are expected to last only 18 months. It might also sell significant stakes in state-run companies like the oil giant Rosneft or Sberbank, and it will not increase military spending.
.. Russian involvement in wars in Ukraine and Syria has swelled the general whirlpool of anxiety, with the possibility of a global war discussed on state-run television. Some analysts accuse the Kremlin of deliberately seeking overseas adventures to distract people from domestic economic woes.
.. “The Russian people got what they wanted, a czar ruling the country,” he said of Mr. Putin. “What we need is an effective manager, but what we got is the Olympics, soccer and war.”
Young prince in a hurry
Asked whether the kingdom’s actions were stoking regional tensions, he said that things were already so bad they could scarcely get any worse. “We try as hard as we can not to escalate anything further,” he says; and he certainly does not expect war. But for his entourage, Saudi Arabia has no choice but to stop Iran from trying to carve out a new Persian empire.
..The Al Sauds have survived by making three compacts: with the Wahhabis to burnish their Islamic credentials as the custodians of the holy places of Mecca and Medina; with the population by providing munificence in exchange for acquiescence to absolutist rule; and with America to defend Saudi Arabia in exchange for stability in oil markets.
But all three of these covenants are fraying.
.. What he lacks in experience and foreign travel, he compensates for with confidence, focus and a battery of consultants’ reports. He reels off numbers and policies with ease, pausing only to take a call from John Kerry, America’s secretary of state. He speaks in the first person, as if he were already king even though he is only second in line.
.. Even after initial budget cuts last year, Saudi Arabia recorded a whopping budget deficit of 15% of GDP. Its pile of foreign reserves has fallen by $100 billion, to $650 billion.
.. This month Saudis accustomed to leaving on the air-conditioner when going on holiday will receive dearer electricity and water bills. Within five years, the plan is that Saudis should be paying market prices, probably with compensation in the form of direct payments for poorer citizens.
.. Prince Muhammad is adamant that there will be no income or wealth taxes, but he plans to balance the budget in five years.
.. The government is to sell land to developers, such as the 4m square metres it owns around Mecca, the most expensive real estate in the world. The prince sees huge promise in developing Islamic tourism to the holy sites; he hopes to boost the 18m annual visitors to 35m-45m in five years.
.. Media reports of Prince Muhammad’s lavish parties in the Maldives and the crown prince’s house-hunting for a Sardinian villa worth half a billion euros are fodder for social media, of which Saudis are keen users.
.. preachers who used to pronounce against corruption stick strictly to their anodyne scripts; and stand-up comedians have stopped poking fun at royals. Tellingly, more people have been executed in King Salman’s first year in office than in any of the previous 20.
.. The prince says that he supports women working, not least to reduce the fertility rate: “A large portion of my productive factors are unutilised,” he says. “I have population growth reaching very scary figures.”
Why Big Oil Should Kill Itself
The managements of leading energy companies must face economic reality and abandon their wasteful obsession with finding new oil. The 75 biggest oil companies are still investing more than $650 billion annually to find and extract fossil fuels in ever more challenging environments. This has been one of the greatest misallocations of capital in history – economically feasible only because of artificial monopoly prices.
..
In a normal competitive market, prices will be set by the cost of producing an extra barrel from the cheapest oilfields with spare capacity. This means that all the reserves in Saudi Arabia, Iran, Iraq, Russia, and Central Asia would have to be fully developed and exhausted before anyone even bothered exploring under the Arctic ice cap or deep in the Gulf of Mexico or hundreds of miles off the Brazilian coast.
.. ExxonMobil, Shell, and BP can no longer hope to compete with Saudi, Iranian, or Russian companies, which now have exclusive access to reserves that can be extracted with nothing more sophisticated than nineteenth-century “nodding donkeys.” Iran, for example, claims to produce oil for only $1 a barrel.
.. For Western oil companies,the rational strategy will be to stop oil exploration and seek profits by providing equipment, geological knowhow, and new technologies such as hydraulic fracturing (“fracking”) to oil-producing countries. But their ultimate goal should be to sell their existing oil reserves as quickly as possible and distribute the resulting tsunami of cash to their shareholders until all of their low-cost oilfields run dry.
That is precisely the strategy of self-liquidation that tobacco companies used, to the benefit of their shareholders. If oil managements refuse to put themselves out of business in the same way, activist shareholders or corporate raiders could do it for them.
.. Mark Carney, Governor of the Bank of England, has warned that the stranded-asset problem could threaten global financial stability if the “carbon budgets” implied by global and regional climate deals render worthless fossil-fuel reserves that oil companies’ balance sheets currently value at trillions of dollars.
.. “The Stone Age did not end,” he warned his compatriots, “because the cavemen ran out of stone.”