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Enter Rostam Ghasemi. While that might not be breaking news to some, the appointment of Ghasemi (who was also Iran’s Revolutionary Guard’s chief) as OPEC’s new president is sure to rock the boat

It’s not beyond the realms of possibility that Ghasemi might spill the beans as to what Saudi Arabia’s actual crude oil reserves are, hence sending the energy-hungry West into damage-control.

Ghasemi is currently subject to US, EU and Australian sanctions and his assets have been blacklisted by US Treasury and western powers. After all, this man belongs to the wing of the Iranian military which threatened to close the Strait of Hormuz if Iran is threatened by a foreign power (ie. Israel or the United States). It’s worthwhile to note that 40% of the world’s oil is shipped through that strait. Heres the kicker. Most of that oil comes from Saudi Arabia. War or no war, it seems that supplies are going to dry up regardless due to increased domestic consumption levels. Just last year alone, the Saudi’s consumed more than 2.4 million barrels of oil a day. That’s a 50% increase just within the last seven years. Yep, it’s going fast.

Philip Verleger, an economist who specializes in oil markets, says even if environmentalists convince Obama to block the Keystone XL pipeline, it won't stop the growth of production in the Canadian oil sands. "With prices around a hundred dollars a barrel globally, that oil is going to make it to the market somehow," Verleger says. "The development may be slowed for a year or two. But one can move the oil west on the existing Kinder Morgan pipeline. They could expand pipelines east. Those pipelines already exist, and they can be expanded."

She added that an admiral with NIC suggested she claim the estimate was between 12,000-25,000 barrels per day, noting the apparent disconnect between what the USGS actually found and what they were being advised to say. "Bottom line: if you are at a university, do convince some of your best and brightest to go into science communication," McNutt wrote. "Please."

Leo Drollas, director and chief economist at the London-based Center for Global Energy Studies, believes closing the strait could affect about 16 percent of global crude oil shipments. "The fallout would obviously hit the prices straight away in the future markets," Drollas stated. "Oil prices would rocket because of the fears of what might happen."

But Drollas believes the spike would be temporary as the countries adjust and the West taps into its reserves.

For his part, Stevens of Chatham House doubts Iran will go through with its threat to close the Strait of Hormuz - in part because it relies on the waterway for its own oil exports

ince June 2010, we have illustrated many physics of impossibilities concocted by BP. Two years later, it seems the world has not awaken from its ignorantly blissful slumber. This disaster is more than just a disastrous mega oil spill. If the world's foremost scientists and investigators cannot figure out the many fundamental flaws in the simple “3 leaks-3 wells” fairy tale, how can there be any hope of ever solving problems beyond kindergarten level? Forget the carbon tax, the ban on hazardous gas emission and just about any anti-pollution measures designed to improve the global environment. All these schemes have sinister undertones with profiting on mass miseries of others.

In the Gulf disaster, you have the biggest environmental polluter in human history. The punishment for a crime of mass destruction that could have been averted, was just a slap on the wrist? If this is not the clearest proof of corruption at the highest level and biggest HSE (health, safety & environment) farce, then what is?

It was not the failure of safety regulations but the enforcement of regulations. The government admitted this much by sacking MMS's director and changing it to BOEMRE. It was not the failure of technology but the devious use of technology to cloak unfair business practices or safety farce at the very least. But would shrewd corporate criminals risk billions of investment dollars just to skimp on some daily operation expenses and safety devices? Just like the fairy tale of the 3 leaks, this was just the red herring. The oil industry will start on its decline just as the coal industry did, after its replacement by alternative cheaper and cleaner energy sources (The Future of Free Energy).

Giant global oil corporations may not have the next 10 years to recover their mega billion dollar investments. With the writings on the wall and their failures to control (prevent) the advent of free energy, the oil oligarchs had to devise emergency exit schemes before oil independence becomes public knowledge. High crude oil prices cannot be manipulated too high or long enough to recoup their billions of investment dollars globally. They risk becoming economic dinosaurs.

"Whether Keystone XL is built or not, the oil will find a way to market," added Alex Pourbaix, a president at TransCanada.

"The climate piece more than anything will be a focus,"

U.S. refineries already have invested in upgrades for heavy oil, which could favor supply from countries like Venezuela without Canada in the equation, said Michael Levi, a senior fellow at the Council on Foreign Relations. The International Energy Agency predicts that unconventional oil will meet a growing part of global demand, jumping from 3 percent in 2009 to 10 percent in 2035.

Then there are plans to extend or build pipelines carrying oil sands crude to Canada's West Coast, where oil could be shipped to thirsty Chinese markets.

Construction of Keystone XL only will play into more demand for oil, rather than spurring investment in cleaner power. The vehicles burning oil from Keystone XL could produce the same amount of C02 as all the trucks and cars in Canada, according to Leach's analysis.

One final idea, which does not involve money going to or from government, is simply requiring that cleaner sources provide a certain fraction of our overall power generation. The many state Renewable Portfolio Standards (that do not include nuclear) and the Clean Energy Standard being considered by Congress and the Obama administration (which does include nuclear) are examples of this policy. While better than nothing, such policies are not ideal in that they are crude, and don’t involve a quantitative incentive based on real external costs. An energy source is either defined as “clean,” or it is not. Note that the definition of “clean” would be decided politically, as opposed to objectively based on tangible external costs determined by scientific studies (nuclear’s exclusion from state Renewable Portfolio Standards policies being one outrageous example). Finally, there is the fact that any such policy would require legislation.

Well, if we can’t tax pollution, how about encouraging the use of clean sources by giving them subsidies? This has proved to be more popular so far, but this idea has also recently run into trouble, given the current situation with the budget deficit and national debt. Events like the Solyndra bankruptcy have put government clean energy subsidies even more on the defensive. Thus, it seems that neither policies involving money flowing to the government nor policies involving money flowing from the government are politically viable at this point.

All of the above begs the question whether there is a policy available that will encourage the use of cleaner energy sources that is revenue-neutral (i.e., does not involve money flowing to or from the government), does not involve the outright (political) selection of certain energy sources over others, and does not require legislation. Enter the Dispatch Queue

There must be enough power plants in a given region to meet the maximum load (or demand) expected to occur. In fact, total generation capacity must exceed maximum demand by a specified “reserve margin,” to address the possibility of a plant going offline, or other possible considerations. Due to the fact that demand varies significantly with time, a significant fraction of the generation capacity remains offline, some or most of the time. The dispatch queue is a means by which utilities, or independent regional grid operators, decide which power plants will operate in order to meet demand at any given instant. A good discussion of dispatch queues and how they operate can be found in this Department of Energy report.

The general goal of the methodology used to set the dispatch queue order is to minimize overall generation cost, while staying in compliance with all federal or state laws (environmental rules, etc.). This is done by placing the power plants with the lowest “variable” cost first in the queue. Plants with the highest “variable” cost are placed last. The “variable” cost of a plant represents how much more it costs to operate the plant than it costs to leave it idle (i.e., it includes the fuel cost and maintenance costs that arise from operation, but does not include the plant capital cost, personnel costs, or any fixed maintenance costs). Thus, one starts with the least expensive plants, and moves up (in cost) until generation meets demand. The remaining, more expensive plants are not fired up. This ensures that the lowest-operating-cost set of plants is used to meet demand at any given time

As far as who makes the decisions is concerned, in many cases the local utility itself runs the dispatch for its own service territory. In most of the United States, however, there is a large regional grid (covering several utilities) that is operated by an Independent System Operator (ISO) or Regional Transmission Organization (RTO), and those organizations, which are independent of the utilities, set the dispatch queue for the region. The Idea

As discussed above, a plant’s place in the dispatch queue is based upon variable cost, with the lowest variable cost plants being first in the queue. As discussed in the DOE report, all the dispatch queues in the country base the dispatch order almost entirely on variable cost, with the only possible exceptions being issues related to maximizing grid reliability. What if the plant dispatch methodology were revised so that environmental costs were also considered? Ideally, the public health and environmental costs would be objectively and scientifically determined and cast in terms of an equivalent economic cost (as has been done in many scientific studies such as the ExternE study referenced earlier). The calculated external cost would be added to a plant’s variable cost, and its place in the dispatch queue would be adjusted accordingly. The net effect would be that dirtier plants would be run much less often, resulting in greatly reduced pollution.

This could have a huge impact in the United States, especially at the current time. Currently, natural gas prices are so low that the variable costs of combine-cycle natural gas plants are not much higher than those of coal plants, even without considering environmental impacts. Also, there is a large amount of natural gas generation capacity sitting idle.

More specifically, if dispatch queue ordering methods were revised to even place a small (economic) weight on environmental costs, there would be a large switch from coal to gas generation, with coal plants (especially the older, dirtier ones) moving to the back of the dispatch queue, and only running very rarely (at times of very high demand). The specific idea of putting gas plants ahead of coal plants in the dispatch queue is being discussed by others.

The beauty of this idea is that it does not involve any type of tax or government subsidy. It is revenue neutral. Also, depending on the specifics of how it’s implemented, it can be quantitative in nature, with environmental costs of various power plants being objectively weighed, as opposed certain sources simply being chosen, by government/political fiat, over others. It also may not require legislation (see below). Finally, dispatch queues and their policies and methods are a rather arcane subject and are generally below the political radar (many folks haven’t even heard of them). Thus, this approach may allow the nation’s environmental goals to be (quietly) met without causing a political uproar. It could allow policy makers to do the right thing without paying too high of a political cost.

Questions/Issues The DOE report does mention some examples of dispatch queue methods factoring in issues other than just the variable cost. It is fairly common for issues of grid reliability to be considered. Also, compliance with federal or state environmental requirements can have some impacts. Examples of such laws include limits on the hours of operation for certain polluting facilities, or state requirements that a “renewable” facility generate a certain amount of power over the year. The report also discusses the possibility of favoring more fuel efficient gas plants over less efficient ones in the queue, even if using the less efficient plants at that moment would have cost less, in order to save natural gas. Thus, the report does discuss deviations from the pure cost model, to consider things like environmental impact and resource conservation.

I could not ascertain from the DOE report, however, what legal authorities govern the entities that make the plant dispatch decisions (i.e., the ISOs and RTOs), and what types of action would be required in order to change the dispatch methodology (e.g., whether legislation would be required). The DOE report was a study that was called for by the Energy Policy Act of 2005, which implies that its conclusions would be considered in future congressional legislation. I could not tell from reading the report if the lowest cost (only) method of dispatch is actually enshrined somewhere in state or federal law. If so, the changes I’m proposing would require legislation, of course.

The DOE report states that in some regions the local utility runs the dispatch queue itself. In the case of the larger grids run by the ISOs and RTOs (which cover most of the country), the report implies that those entities are heavily influenced, if not governed, by the Federal Energy Regulatory Commission (FERC), which is part of the executive branch of the federal government. In the case of utility-run dispatch queues, it seems that nothing short of new regulations (on pollution limits, or direct guidance on dispatch queue ordering) would result in a change in dispatch policy. Whereas reducing cost and maximizing grid reliability would be directly in the utility’s interest, favoring cleaner generation sources in the queue would not, unless it is driven by regulations. Thus, in this case, legislation would probably be necessary, although it’s conceivable that the EPA could act (like it’s about to on CO2).

In the case of the large grids run by ISOs and RTOs, it’s possible that such a change in dispatch methodology could be made by the federal executive branch, if indeed the FERC has the power to mandate such a change

Effect on Nuclear With respect to the impacts of including environmental costs in plant dispatch order determination, I’ve mainly discussed the effects on gas vs. coal. Indeed, a switch from coal to gas would be the main impact of such a policy change. As for nuclear, as well as renewables, the direct/immediate impact would be minimal. That is because both nuclear and renewable sources have high capital costs but very low variable costs. They also have very low environmental impacts; much lower than those of coal or gas. Thus, they will remain at the front of the dispatch queue, ahead of both coal and gas.

Indonesia has signed contracts for 2.3 gigawatts of plants, Bloomberg New Energy Finance data show. A gigawatt is about equal to the output of a new atomic reactor, and requires $2 billion to $4 billion of investment. “There’s a remarkable opportunity for Indonesia to increase the amount of power generated from geothermal,” says Stephen W. Green, former head of Chevron’s Indonesia and Philippines operations and now its vice-president of policy, government, and public affairs. “There are synergies between oil and geothermal and it makes sense for us to exploit that.”

Unocal negotiated Indonesia’s first foreign-partnership geothermal license in 1982 with the help of U.S. President Barack Obama’s late stepfather, Lolo Soetoro, who worked for the U.S. company as a government liaison. Chevron acquired Unocal in 2005. At the plant in Java, which lies inside a nature preserve, hot water and steam are pumped from as deep as 10,535 feet below the earth’s surface through 34 miles of pipes to turn turbines to make power. Each well takes as much as 90 days to drill and costs up to $7 million, Chevron says. The company is now planning additional plants in Indonesia, including a potential 200-MW facility in South Sumatra.

A government official with knowledge of the permitting process who would address the issue only on condition of anonymity said, “It is presumptuous for the company to take on eminent domain cases before there is any decision made.”Landowners have begun joining forces and challenging the company’s assumption that it can legally seize land.

CPS didn’t just pull nukes out of a hat when it went looking for energy options. CEO Milton Lee may be intellectually lazy, but he’s not stupid. Seeking to fulfill the cheap power mandate in San Antonio and beyond (CPS territory covers 1,566 square miles, reaching past Bexar County into Atascosa, Bandera, Comal, Guadalupe, Kendall, Medina, and Wilson counties), staff laid natural gas, coal, renewables and conservation, and nuclear side-by-side and proclaimed nukes triumphant. Coal is cheap upfront, but it’s helplessly foul; natural gas, approaching the price of whiskey, is out; and green solutions just aren’t ready, we’re told. The 42-member Nuclear Expansion Analysis Team, or NEAT, proclaimed “nuclear is the lowest overall risk considering possible costs and risks associated with it as compared to the alternatives.” Hear those crickets chirping?

NEAT members would hold more than a half-dozen closed-door meetings before the San Antonio City Council got a private briefing in September. When the CPS board assembled October 1 to vote the NRG partnership up or down, CPS executives had already joined the application pending with the U.S. Nuclear Regulatory Commission. A Supplemental Participation Agreement allowed NRG to move quickly in hopes of cashing in on federal incentives while giving San Antonio time to gather its thoughts. That proved not too difficult. Staff spoke of “overwhelming support” from the Citizen’s Advisory Board and easy relations with City staff. “So far, we haven’t seen any fatal flaws in our analysis,” said Mike Kotera, executive vice president of energy development for CPS. With boardmember and Mayor Phil Hardberger still in China inspecting things presumably Chinese, the vote was reset for October 29.

No one at the meeting asked about cost, though the board did request a month-by-month analysis of the fiasco that has been the South Texas Project 1&2 to be delivered at Monday’s meeting. When asked privately about cost, several CPS officers said they did not know what the plants would run, and the figure — if it were known — would not be public since it is the subject of contract negotiations. “We don’t know yet,” said Bob McCullough, director of CPS’s corporate communications. “We are not making the commitment to build the plant. We’re not sure at this point we really understand what it’s going to cost.” The $206 million outlay the board will consider on Monday is not to build the pair of 1,300-megawatt, Westinghouse Advanced Boiling Water Reactors. It is also not a contract to purchase power, McCullough said. It is merely to hold a place in line for that power.

It’s likely that we would come on a recurring basis back to the board to keep them apprised of where we are and also the decision of whether or not we think it makes sense for us to go forward,” said Larry Blaylock, director of CPS’s Nuclear Oversight & Development. So, at what point will the total cost of the new plants become transparent to taxpayers? CPS doesn’t have that answer. “At this point, it looks like in order to meet our load growth, nuclear looks like our lowest-risk choice and we think it’s worth spending some money to make sure we hold that place in line,” said Mark Werner, director of Energy Market Operations.

Another $10 million request for “other new nuclear project opportunities” will also come to the board Monday. That request summons to mind a March meeting between CPS officials and Exelon Energy reps, followed by a Spurs playoff game. Chicago-based Exelon, currently being sued in Illinois for allegedly releasing millions of gallons of radioactive wastewater beneath an Illinois plant, has its own nuclear ambitions for Texas. South Texas Project The White House champions nuclear, and strong tax breaks and subsidies await those early applicants. Whether CPS qualifies for those millions remains to be seen. We can only hope.

CPS has opted for the Super Honkin’ Utility model. Not only that — quivering on the brink of what could be a substantial efficiency program, CPS took a leap into our unflattering past when it announced it hopes to double our nuclear “portfolio” by building two new nuke plants in Matagorda County. The utility joined New Jersey-based NRG Energy in a permit application that could fracture an almost 30-year moratorium on nuclear power plant creation in the U.S.

After Unit 1 came online in 1988, it had to be shut down after water-pump shaft seared off in May, showering debris “all over the place,” according to Nucleonics Week. The next month two breakers failed during a test of backup power, leading to an explosion that sheared off a steam-generator pump and shot the shaft into the station yard. After the second unit went online the next year, there were a series of fires and failures leading to a half-million-dollar federal fine in 1993 against Houston Power. Then the plant went offline for 14 months. Not the glorious launch the partnership had hoped for. Today, CPS officials still do not know how much STP has cost the city, though they insist overall it has been a boon worth billions. “It’s not a cut-and-dried analysis. We’re doing what we can to try to put that in terms that someone could share and that’s a chore,” said spokesman McCollough. CPS has appealed numerous Open Records requests by the Current to the state Attorney General. The utility argues that despite being owned by the City they are not required to reveal, for instance, how much it may cost to build a plant or even how much pollution a plant generates, since the electricity market is a competitive field.

How do we usher in this new utopia of decentralized power? First, we have to kill CPS and bury it — or the model it is run on, anyway. What we resurrect in its place must have sustainability as its cornerstone, meaning that the efficiency standards the City and the utility have been reaching for must be rapidly eclipsed. Not only are new plants not the solution, they actively misdirect needed dollars away from the answer. Whether we commit $500 million to build a new-fangled “clean-coal” power plant or choose to feed multiple billions into a nuclear quagmire, we’re eliminating the most plausible option we have: rapid decentralization.

A 2003 study at the Massachusetts Institute of Technology estimates the cost of nuclear power to exceed that of both coal and natural gas. A U.S. Energy Information Administration report last year found that will still be the case when and if new plants come online in the next decade. If ratepayers don’t pay going in with nuclear, they can bet on paying on the way out, when virtually the entire power plant must be disposed of as costly radioactive waste. The federal government’s inability to develop a repository for the tens of thousands of tons of nuclear waste means reactors across the country are storing spent fuel in onsite holding ponds. It is unclear if the waste’s lethality and tens of thousands of years of radioactivity were factored into NEAT’s glowing analysis.

The federal dump choice, Nevada’s Yucca Mountain, is expected to cost taxpayers more than $60 billion. If it opens, Yucca will be full by the time STP 3&4 are finished, requiring another federal dump and another trainload of greenbacks. Just the cost of Yucca’s fence would set you back. Add the price of replacing a chain-link fence around, let’s say, a 100-acre waste site. Now figure you’re gonna do that every 50 years for 10,000 years or more. Security guards cost extra. That is not to say that the city should skip back to the coal mine. Thankfully, we don’t need nukes or coal, according to the American Council for an Energy-Efficient Economy, a D.C.-based non-profit that champions energy efficiency. A collection of reports released this year argue that a combination of ramped-up efficiency programs, construction of numerous “combined heat and power” facilities, and installation of on-site renewable energy resources would allow the state to avoid building new power plants. Texas could save $73 billion in electric generation costs by spending $50 billion between now and 2023 on such programs, according to the research group. The group also claims the efficiency revolution would even be good for the economy, creating 38,300 jobs. If ACEEE is even mostly right, plans to start siphoning millions into a nuclear reservoir look none too inspired.

To jump tracks will take a major conversion experience inside CPS and City Hall, a turning from the traditional model of towering plants, reels of transmission line, and jillions of dependent consumers. CPS must “decentralize” itself, as cities as close as Austin and as far away as Seattle are doing. It’s not only economically responsible and environmentally sound, but it is the best way to protect our communities entering what is sure to be a harrowing century. Greening CPS CPS is grudgingly going greener. In 2004, a team of consultants, including Wisconsin-based KEMA Inc., hired to review CPS operations pegged the utility as a “a company in transition.” Executives interviewed didn’t understand efficiency as a business model. Even some managers tapped to implement conservation programs said such programs were about “appearing” concerned, according to KEMA’s findings.

While the review exposed some philosophical shortcomings, it also revealed for the first time how efficiency could transform San Antonio. It was technically possible, for instance, for CPS to cut electricity demand by 1,935 megawatts in 10 years through efficiency alone. While that would be accompanied with significant economic strain, a less-stressful scenario could still cut 1,220 megawatts in that period — eliminating 36 percent of 2014’s projected energy use. CPS’s current plans call for investing $96 million to achieve a 225-megawatt reduction by 2016. The utility plans to spend more than four times that much by 2012 upgrading pollution controls at the coal-fired J.T. Deely power plant.

In hopes of avoiding the construction of Spruce 2 (now being built, a marvel of cleanliness, we are assured), Citizen Oversight Committee members asked KEMA if it were possible to eliminate 500 megawatts from future demand through energy efficiency alone. KEMA reported back that, yes, indeed it was possible, but would represent an “extreme” operation and may have “unintended consequences.” Such an effort would require $620 million and include covering 90 percent of the cost of efficiency products for customers. But an interesting thing happens under such a model — the savings don’t end in 2012. They stretch on into the future. The 504 megawatts that never had to be generated in 2012 end up saving 62 new megawatts of generation in 2013 and another 53 megawatts in 2014. With a few tweaks on the efficiency model, not only can we avoid new plants, but a metaphorical flip of the switch can turn the entire city into one great big decentralized power generator.

Even without good financial data, the Citizen’s Advisory Board has gone along with the plan for expansion. The board would be “pennywise and pound foolish” not to, since the city is already tied to STP 1&2, said at-large member Jeannie O’Sullivan. “Yes, in the past the board of CPS had been a little bit not as for taking on a [greater] percentage of nuclear power. I don’t know what their reasons were, I think probably they didn’t have a dialogue with a lot of different people,” O’Sullivan said.

For this, having a City-owned utility offers an amazing opportunity and gives us the flexibility to make most of the needed changes without state or federal backing. “Really, when you start looking, there is a lot more you can do at the local level,” said Neil Elliott of the ACEEE, “because you control building codes. You control zoning. You can control siting. You can make stuff happen at the local level that the state really doesn’t have that much control of.” One of the most empowering options for homeowners is homemade energy provided by a technology like solar. While CPS has expanded into the solar incentives field this year, making it only the second utility in the state to offer rebates on solar water heaters and rooftop panels, the incentives for those programs are limited. Likewise, the $400,000 CPS is investing at the Pearl Brewery in a joint solar “project” is nice as a white tiger at a truck stop, but what is truly needed is to heavily subsidize solar across the city to help kickstart a viable solar industry in the state. The tools of energy generation, as well as the efficient use of that energy, must be spread among the home and business owners.

Joel Serface, with bulb-polished pate and heavy gaze, refers to himself as a “product of the oil shock” who first discovered renewables at Texas Tech’s summer “geek camp.” The possibilities stayed with him through his days as a venture capitalist in Silicon Valley and eventually led him to Austin to head the nation’s first clean-energy incubation center. Serface made his pitch at a recent Solar San Antonio breakfast by contrasting Texas with those sun-worshipping Californians. Energy prices, he says, are “going up. They’re not going down again.” That fact makes alternative energies like solar, just starting to crack the 10-cent-per-killowatt barrier, financially viable. “The question we have to solve as an economy is, ‘Do we want to be a leader in that, or do we want to allow other countries [to outpace us] and buy this back from them?’” he asked.

To remain an energy leader, Texas must rapidly exploit solar. Already, we are fourth down the list when it comes not only to solar generation, but also patents issued and federal research awards. Not surprisingly, California is kicking silicon dust in our face.