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Once Again, Politics Collides with Energy Reality – and Everyone Suffers

by | published June 27th, 2017

With the almost daily battles raging inside the Beltway over claims of “fake news,” it’s hardly surprising that energy hasn’t been spared.

But what is surprising is the jarringly overt way in which energy is being politicized. The new Secretary of Energy, Rick Perry, is a good case in point.

As a former governor of Texas, Perry is a public supporter of increasing U.S. production of hydrocarbons like oil and gas, while openly criticizing the potential for alternative energy sources and roundly dismissing concerns over climate change.

And by the way, several times in the recent past he’s also come out in favor of shutting down the very Department of Energy that he’s now in charge of.

Recently, Perry’s gone on the offensive against renewables – as well as (whether he realizes it or not) natural gas. He claims they’re threatening the national power grid.

Here’s how some of the targeted companies responded…

There are No “Silver Bullets” in Energy

The nub of Perry’s argument comes right out of a frequent theme seen on the Trump campaign trail: that government subsidies to solar and wind power are responsible for the demise in coal production.

Now, regular readers of Oil & Energy Investor know my approach to this ongoing debate. What is needed in both the domestic and global energy markets is a genuine balance in energy availability.

That requires multiple sources providing energy as seamlessly as possible. An additional important component emerges when we also consider the desirability of having interchangeability between and among energy types.

That means an approach looking to wean an economy off using, say, oil or coal, is misplaced. “Silver bullets” only work in horror movies.

All energy sources are required. It’s the integration of these sources that translates into the most efficient, cost-effective, and best solution for both producers and consumers.

Unfortunately, putting a heavy political thumb on the scales seems the preferred course of action in D.C…

For Perry, Only Coal is Reliable

These days, the new refrain coming from the Energy Secretary is to link continued reliance on coal with essential availability of electricity. In other words, expanding renewables is supposed to make the power grid less reliable.

Keep in mind that this is an approach that does not address any environmental impact issues, only the availability of power.

A few months ago, Perry announced a review would be conducted to “prove” the connection. Overlook for a moment that any real, objective evaluation of the matter shouldn’t prejudge its outcome – unless, of course, the Perry “research” is undertaken by an avowed oil supporter and is designed to fit into an already established political agenda…

But the industry that’s being targeted is already responding…

And that makes the June 21 note written by Nicholas Kusnetz and appearing in Inside Climate News (“Coal’s Decline Not Hurting Power Grid Reliability, Study Says“) such an interesting read…

Market Forces are Pushing Natural Gas to Replace Coal

As Nick writes, a new study released on June 20 shows that coal’s falling share of the U.S. power mix is mostly caused by market forces (not government intervention), and is not making the grid less reliable.

For example, the study cites an analysis by the American Electric Reliability Corporation (NERC). According to this analysis, most metrics of grid reliability are either improving or flat, with the number of blackouts falling.

In other words, to quote the study, “The retirement of aging or uneconomic resources has not led, in any region, to an observed reduction in BPS [bulk power system] reliability from either resource adequacy or system security perspectives.”

Now, the authors of the June 20 study have their own agenda. The report was released by the American Wind Energy Association and the Advanced Energy Economy, which is made up of renewable energy companies, utilities, and other firms.

But the issue here needs to be addressed by data, not invective.

And while it’s true that coal power plants have been retired at record rates recently, the cause is simple: because of the U.S. shale boom, natural gas is much, much cheaper – and new gas power plants are more efficient and less costly.

Unfortunately, to date, there is little reason to conclude Rick Perry has any interest in a real objective debate on these issues…

The “Grid Review” Has Already Been Postponed

When ordering his review, Perry mentioned concerns about “the diminishing diversity of our nation’s electric generation mix and what that could mean for baseload power and grid resilience.”

As the June 20 study argued using actual data, neither concern is justified. Baseload coal is being replaced mostly by baseload natural gas, which is just as reliable.

But given his choice of who will lead this review – Travis Fisher, described by Nick Kusnetz as “a political appointee who previously worked for the Institute for Energy Research, an organization that favors fossil fuels” – whether Perry’s “grid review” will follow the evidence or not remains to be seen.

Politics is as politics does, I suppose. But curiously, this review has already been postponed from June to July.

P.S. Natural gas and renewable energy companies aren’t the only ones that don’t like what’s happening in D.C. right now. As I revealed earlier this month, oil companies are unhappy too. Click here to see why.

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