Posts by Williams

While the nation has been focused on new sources of natural gas and shale oil, few noticed the slow decline of an older energy source, nuclear power. Today, commercial nuclear power is struggling to stay in the game.

The power markets are hammering the nation’s nukes. Over a decade ago, several regions decided to create Regional Transmission Organizations (or Independent System Operators) and use the market to set power prices. Today, North America has ten independent RTOs/ISOs, where wholesale power is auctioned every few minutes. Keep reading →

It is an urban myth that if the oil industry drilled more, gasoline prices would decrease. The myth relies on the premise that as more oil supplies are introduced, market forces would take over and domestic prices would fall. But it turns out that increasing domestic production has virtually no effect on gasoline prices.

The US already increased production. According to the Energy Information Administration (EIA), US oil production reached 310,403,000 barrels per month in October 1970 that became the historic peak. Ever since that time, production changed course and it has been in a steady decline. By 2005, production sank more than 50 percent to approximately 150,000,000 barrels per month. The bottom was reached in September 2008 when production sank to 119,477,000 barrels per month. Since then, for the first time since the 1980’s, monthly production changed direction and it has been trending upward. Last July, the US touched a new record of 196,405,000 barrels per month, a production level the US has not witnessed for over a decade. Keep reading →

The nation is flooded with natural gas. For the last twelve months, the amount of gas available to the market exceeds five-year averages. With more gas than anyone can use, producers are now looking for new consumers. Two new opportunities have emerged and one could disrupt the nation’s economy in some very positive ways.

Less than five years ago it looked like North America’s natural gas market was going to become highly dependent on foreign imports. Anticipating a growing need to offset declining natural resources, investors built eleven liquefied natural gas (LNG) import terminals along the east coast and the Gulf of Mexico. Seven more were approved by federal regulators. But during the last 12 months, very little LNG was imported. Keep reading →

The International Energy Agency (IEA) claims in their World Energy Outlook that it is now technically possible for the United States to become energy independent by 2020. But that’s not their primary message. IEA is also warning that any independence will be short lived, and that message has been lost on most analysts.

IEA is an international organization based in France, which works to ensure reliable, affordable and clean energy for its 28 member countries, including the United States. It is not to be confused with the Energy Information Administration (EIA), which is a different organization that is nestled within the US Department of Energy (DOE). The IEA is not the EIA. But both organizations have credibility. Both organizations provide analysts with primary sources of information about energy, particularly about consumption data. Keep reading →

Solar power reduces electricity prices. As more solar is added to deregulated power grids, power prices fall lower. The secret sauce is the markets.

Deregulated power markets are invisible to many Americans, yet every few minutes they set the price for much of their electric power. There are ten separate power markets currently operating in the North America. According to the ISO/RTO Council, they serve approximately two-thirds of electricity consumers in the United States and more than half of all consumers in Canada. Keep reading →

Power prices are too low. That’s what utility executives believe. They need prices to increase for their generators to return healthy earnings. Otherwise, they will have to retire plants and exit the market.

Dominion Resources decided not to wait. They recently announced plans to retire their Wisconsin-based Kewaunee Nuclear Power Station 21 years early. Dominion concluded they would not be able to achieve any earnings for their 556-megawatt unit, they might even lose money and they could not find anyone to buy it. They had no choice but to shutter and decommission Kewaunee. Keep reading →

One criticism of wind and solar power is their lack of reliability. Both depend on the weather for energy production and any change in weather affects their ability to produce electricity. In many regions, wind has the added liability of producing power when it is least needed. To solve this challenge, some suggest pairing standby generators with wind and solar farms so continuous power can be produced. Under this scheme, proponents argue that standby generators should be capable of varying its output to assure continuous energy production.

Varying output is called load following or turn down. The physical objective is to throttle back power generation to response to changing demands. The financial objective is to turn down without increasing fuel consumption on a unit basis. The environmental objective is to minimize air pollution, specifically carbon. Keep reading →

When it comes to energy and politics, the United States is not what it appears. Deregulation of the power markets is one example. Some regions of the nation have developed robust power markets. Others regions do not and they don’t want it.

The regionalization of the power markets means there is no such thing as a national grid. According to The ISO/RTO Council, the United States has seven formalized power markets and vast regions where no markets exist at all. Approximately two-thirds of US consumers are served by the seven deregulated power markets. The objective of these markets is to provide buyers and sellers price discovery, liquidity, and non-discriminatory access to wholesale power. Keep reading →

In the United States, utilities have been switching fuels for the power generators. While many commentators believe the motivation to switch is regulatory, the primary incentive is economics.

Of course, the Environmental protection Agency’s (EPA) new coal and coal-fired power plant rules influence a utility, but the markets are the primary driver behind utilities to seek fuel options. EPA’s rules are not the prime mover, at least not now. Keep reading →

On the surface, LNG appears to represent a new opportunity where easy profits are for the taking. In reality, producing and delivering LNG is a difficult business, and that business will only get harder as time goes on.

Unlike natural gas, where prices are established regionally, LNG is becoming a global commodity. Market prices depend on global supplies and demand. It is expected supplies will remain constrained for the next three years. Keep reading →