Extreme Temperature Diary- Wednesday March 11th, 2020/ Main Topic: Effects Of Cheap Crude On Renewables

Wednesday March 11th… Dear Diary. The main purpose of this ongoing blog will be to track United States extreme or record temperatures related to climate change. Any reports I see of ETs will be listed below the main topic of the day. I’ll refer to extreme or record temperatures as ETs (not extraterrestrials).😉

Main Topic: Effects of Cheap Crude on Renewables

Dear Diary. Yesterday we started to delve into coronavirus crisis interactions with the climate crisis. Today let’s do a deeper dive into the effects stemming from one aspect of this worldwide health crisis. As a response to the crisis Saudi Arabia has decided to dump crude on the globe to get more market share, lowering the price of a barrel of oil below $40 a barrel thereby putting a lot of pressure on Russia. The price could drop to near $20 before this “oil war” is over. What are some of the ramifications on renewable and the fracking industry?

First, our dear leader has decided to attempt to prop up the fracking industry due to low crude prices. It’s interesting but sad that Trump is thinking more about industry than health at the start of the coronavirus outbreak, or it would at least appear to be that way. Take a look:

https://earther.gizmodo.com/a-fracking-bailout-is-a-terrible-idea-1842246263

By Dharma Noor from 3/10/2020.

Illustration for article titled A Fracking Bailout Is A Terrible Idea

Photo: Getty

The U.S. government definitely has its priorities in order. Apparently, it’s considering using the coronavirus outbreak as an excuse to pour money into fossil fuel companies.

The Washington Post reports that the Trump administration is considering kicking money to the beleaguered industry after Saudi Arabia kicked off an oil price war over the weekend, fueled largely by the coronavirus outbreak that has slowed demand worldwide. That has burst the shale oil and gas bubble, which was made possible by cheap loans from Wall Street after the 2008 recession.

That influx of money on the cheap has led the U.S. to become the world’s largest oil producer. It’s also helped drive a global rise in methane emissions, a greenhouse gas more climate-warming than carbon. And the spike in oil and gas production has also led to human rights abuses, notably what went down at Standing Rock over the Dakota Access Pipeline.

Yearly Oil Demand Is Now Projected to Drop for the First Time in a Decade Due to COVID-19

The worsening global crisis wrought by COVID-19 is leading to canceled international negotiations…Read more

But it looks like the genocidal party is over: oil and gas prices are down, bankruptcies and layoffs are up. The world doesn’t need any more shale oil and gas from the U.S. Production of oil and gas was outpacing demand already, and now due to the current coronavirus pandemic, the bubble is deflating even more quickly: demand for all kinds of oil is expected to drop for the first time in a decade.

This would be a great time to seriously transition away from fossil fuels and stimulate the economy by investing in new renewable energy infrastructure and a just transition program for fossil fuel workers under a Green New Deal. Instead, the Trump administration is reportedly considering pushing federal aid for shale oil and gas companies hit by plummeting oil prices amid the coronavirus outbreak. The Post reports that billionaire Harold Hamm, the founder of multibillion-dollar fracking firm Continental Resources and Trump energy advisor, has reached out but not made “direct” contact with the administration to talk about “any action that the administration might take to protect and preserve American interests at this time.”

The Post goes on to quote a senior administration official as saying helping fracking companies out is “one area we will be looking at for targeted assistance.” What do you think they’ll do with that money? Probably what they do best: drill, baby, drill, consequences be damned.

Just to recap, that means the government is weighing whether to use the public’s money to bail out companies that are not only destroying the planet, but have also been shown to be economically unsustainable with or without the added pressure of coronavirus.

I know I shouldn’t be surprised, but come on. This is a country where millions of people don’t have healthcare and could face bankruptcy if they go to the doctor for coronavirus tests or treatment. The Trump administration said Medicare and Medicaid may not cover all healthcare for coronavirus patients. But it thinks we can bail out companies producing a product that’s worse for the planet than coal and isn’t even profitable? We can’t make sure people can afford to weather a global health crisis, but we can afford to support businesses that knowingly profited off of ecological destruction?

Dharna NoorPostsTwitter

Staff writer, Earther

……………………………………………………………………

I came upon an older article giving points about the effects of cheap crude on renewables. This isn’t good news for the environment:

“The dramatic fall in oil prices since mid-2014 has raised questions about whether the availability of cheap crude could derail the movement toward lower carbon energy sources, which has been gathering momentum in the last decade and is important to the stabilization of the world’s climate.” – Columbia University  | SIPA Center on Global Energy Policy

Last year I had the pleasure of attending Dr. Geoffrey Heal’s New Developments in Energy Markets class at Columbia Business School (and also had the honor of teaching a section on retail electricity markets).  Dr. Heal, noted for his contributions to economic theory and resource and environmental economics, with co-author Karoline Hallmeyer, recently published a paper for the Columbia University | SIPA Center on Global Energy Policy that addresses the quote above and explores how low oil pricing may affect the penetration of renewable fuels and generation.  The key findings are below and the full study is available here (PDF).

Key Findings:

  • Low oil prices could in principle affect the progress of renewable energy in several ways, by competing with biofuels to displace gasoline in transportation, by making vehicles powered by internal combustion engines more competitive with electric vehicles, and by potentially lowering natural gas prices. Low oil prices have already reduced the appeal of biofuels and of electric vehicles. Biofuels and electric vehicles can still be less costly than their traditional competitors, but the margin is now very fine.
  • In the United States, low gasoline prices make it hard to justify the use of electric vehicles on economic grounds. However, the fact that in the United States most gasoline-powered vehicles return very low gas mileage boosts the competitiveness of EVs. In Europe, EVs should remain competitive with internal combustion engines getting up to 30 miles per gallon with fuel prices of about $6 per gallon and an annual mileage of 15,000. Cost is of course not the only factor affecting the adoption of electric vehicles. Range, charge time, and availability of charging stations are all major issues, so cost parity is no guarantee of market penetration.
  • Because little oil is used to generate electricity, the  primary impact oil prices will have on the competitiveness of different electricity fuels is through its impact on natural gas, which is used to generate 27 percent of electricity in the United States and around 22 percent globally. The impact of low oil prices on natural  gas prices cuts in both directions. In some regions of the world where gas is now very expensive, there will be a drop in gas prices because of the way contracts are written (although there is a general expectation that this aspect of contracts could change). In other regions, the supply of associated gas may fall, and prices may rise, as oil production is cut back. But in yet other regions, resources may be redirected from fracking for oil to fracking for gas, leading to an increase in supply and a drop in prices.
  • While oil is used in only a small fraction of power generation in the United States and globally, a comparison of costs shows that even at current lower levels, oil will not compete with renewable energy  sources in the generation of electric power. For oil-fired power stations to be competitive, oil prices would have to fall to unsustainably low levels—around $15 per  barrel, a price level at which the majority of oil producers would be losing money.

Andy Anderson, LEED AP O+M, CMVP
Managing Director

EnergyWatch Inc.
1261 Broadway, Suite 510
New York, NY 10001
P 212.616.5198
andy@energywatch-inc.com

I’ll be posting more on these interactions between COVID-19 and the climate crisis. Stay tuned for updates like these:

Please consider donating through the Paypal widget on this site. I need everyone’s support to continue my work, especially that of processing NCEI record count data for scientific research.

Here is some more weather and climate news from Wednesday:

(As usual, this will be a fluid post in which more information gets added during the day as it crosses my radar, crediting all who have  put it on-line. Items will be archived on this site for posterity.)

Here are more records from Europe:

(If you like these posts and my work please contribute via the PayPal widget, which has recently been added to this site. Thanks in advance for any support.) 

Guy Walton “The Climate Guy”

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