Thinking differently about the future of energy

A few years ago, my brother mentioned to me his thinking that the reason there was so much push for electric cars was to reshape the demand for oil as an element of foreign policy.  

High volume producers like Russia and Saudi Arabia are dependent on oil (and natural gas) as a significant generator of national government budgets, but also use energy supplies and provision as a way to project national power.

Businessweek pointed out a few years ago that the US is also a major oil producer, equally a Petro State like Russia or Saudi Arabia ("The Petro States of America").  

And I've written about how Houston's development success attributed to its lack of zoning is more than anything the result of  its role as the headquarters of the US oil and petrochemical industries ("I get tired of the articles that ascribe Houston's economic success to its lack of zoning").

Coincident with the start of the pandemic, Saudi Arabia dropped oil prices as a way to pressure both Russia and the US shale oil industry.  

The timing was bad, but the pandemic-fueled recession dropped oil demand and pricing, thereby crushing the US shale oil and natural gas industry ("The oil crash doesn't look good economically for states like Texas (Oklahoma, North Dakota, etc.)"), which was what SA and Russia wanted all along.  

US shale-focused firms are entering bankruptcy at a fast clip. BP is reducing its reliance on oil production.  And as the production of electricity becomes more prominent, independently of the energy source which produces it, "utility companies" like Iberdrola, E.ON, and RWE become as significant as oil companies.

1.  Economist Magazine has a story on the future of "Electrostates" suggesting that China, just in terms of its place in the manufacturing of solar panels and other clean energy technologies and the deployment of these technologies at such a large scale, will supersede the place of petrostates like Saudi Arabia ("America’s domination of oil and gas will not cow China").

2,  But Foreign Policy Magazine disagrees ("Everything You Think About the Geopolitics of Climate Change Is Wrong"), making the point that what will matter going forward, at least during the long period of transmission, is the cost of energy production--Saudi Arabia is the cheapest producer of oil, and Russia of natural gas--vis a vis low and high cost (like shale) producers, as well as the overall environmental efficiency of production--for example, compared to the US oil producers, there's very little flaring of natural gas ("The US Oil and Gas Industry’s Methane Problem Is Catching up With It," Resilence).

Relatedly, the Wall Street Journal excerpts ("The New Geopolitics of Energy") a new book by Daniel Yergin, The New Map: Energy, Climate and the Clash of Nations (review).

3.  Separately, a study finds countries that commit to nuclear power over and/or equal to renewable energy sources have less overall carbon emissions reductions ("Study: Renewables, not nuclear power, can provide truly low carbon energy," UPI).

4.  This is relevant to Utah and Idaho because there is a long term push to build an "efficient" experimental nuclear energy facility, to be funded by local municipalities through long term energy contracts ("How nuclear power may become a reality for Utah and Idaho" and "Critics of planned nuclear power project urge Utah cities to pull out before it’s too late," Salt Lake Deseret News).

I thought it was "crazy" merely because over the last 40 years, virtually every new nuclear energy construction project in the US has ended up in disaster with billions of dollars of overruns.  

It just doesn't make sense from the standpoint of construction, overall safe management of the facilities (although certain US utility firms have developed best practice expertise in running such plants), and dealing with safe handling and storage of nuclear waste.

5.  California joins various European cities in setting a deadline to stop the sales of fossil fuel motor vehicles ("California Plans to Ban Sales of New Gas-Powered Cars in 15 Years," New York Times), granted not til 2035.

6.  Electric cars and Tesla.  I've been critical of Elon Musk because he's a blowhard, but the reality is that he is reshaping the US car industry towards electric vehicle production. What's interesting is that with these kinds of scalar shifts in the nature of an industry, traditional producers stuck not just with legacy costs but legacy systems, can be wrong footed in terms of marketing, branding, and image.  That's what's happening with Tesla vs. Ford and GM.

Ford and GM can manufacture vehicles much better than Tesla, but in terms of brand image, people won't seek out electric vehicles from the traditional companies, because those firms aren't cool. 

Although Tesla is superior in battery technology and the use of IT, especially in digital versus analog upgrade processes, and in developing external fast charging networks "in the field" making it harder for Big 3 vehicles to compete ("EV Comparison: Tesla Model 3 Vs. Chevy Bolt," InsideEVs).

It's a different element of disruptive innovation that hasn't been discussed in the context of the original theory.

7.  And because electric cars are so much cheaper to maintain compared to internal combustion engines, the higher initial price is offset by lower maintenance costs over time ("Tesla Model 3 crushes Dodge Charger in 1-year review of cost of operation as police car," Elektrek).